Settlement Agreements are a legally binding way to bring to an end an employment relationship and/or to resolve a dispute in the workplace. The aim in using a settlement agreement is to try to avoid both parties ending up in an Employment Tribunal, which can be both expensive and time consuming.
The key features of a settlement agreement:
- When a settlement agreement is concluded an employee waives any future right to make a claim against an employer in a court or to an Employment Tribunal.
- There is no obligation to enter into a settlement agreement, they are always voluntary.
- Settlement agreements must be in writing.
- The settlement agreement will usually include reference to a payment that is to be made to the employee, as well as other conditions, such as the employer providing a reference.
It is usual for the employer to cover the costs of a settlement agreement, including the employee’s legal fees. Getting the advice of a solicitor is a key part of the process and the agreement won’t be considered legal until the employee has been given legal advice on the document they want to sign.
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