Settlement Agreements

In circumstances where an employee leaves your company or their employment is terminated, a settlement agreement can provide a swift and efficient resolution. Our team can draft comprehensive settlement agreements tailored to your needs, ensuring all legal aspects are covered to prevent future claims.

What is a Settlement Agreement?

A settlement agreement formalises the terms under which an employee’s contract is terminated.

It’s crucial to understand that settlement agreements are for potential claims and genuine disputes. A written or oral agreement alone won’t prevent ex-employees from bringing claims later. Properly executed, a settlement agreement eliminates the risk of future claims by former employees.

Key Considerations

The law requires an employee to receive independent legal advice on the terms of a settlement agreement before signing, as the employee is likely to waive significant rights and enter into significant restrictions. It is important that the employee understands the implications of the agreement.

When preparing a settlement agreement, consider the following key points to ensure fairness and clarity:

Adequate Compensation: Ensure the compensation offered is fair and sufficient to settle the potential claims being waived.

Post-Termination Restrictions: Clearly define any restrictions on the employee’s future employment to avoid ambiguity.

Reference Wording: Ensure the wording of any reference provided is neutral and unlikely to hinder the employee’s future job prospects.

Confidentiality Clauses: Be explicit about what information is deemed confidential to ensure the employee can reasonably comply.

Clarity of Clauses: Ensure all clauses are clear, with no uncertain or potentially unknown consequences.

Legal Costs and Contributions

Typically, employers are expected to contribute to the legal costs incurred by the employee when receiving advice on a settlement agreement. The amount of contribution can vary. At Laceys, we provide transparency from the outset about potential costs and whether your contribution will cover them fully. If additional costs arise, we will help you understand your options and make informed decisions.

By considering these factors, you can ensure that your settlement agreements are robust, fair, and legally sound, thereby safeguarding your business against future disputes. For further advice please contact one of our expert Employment experts today.