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Employment Settlement Agreements

What an employee should know

Settlement Agreements

Settlement Agreements (previously known as Compromise Agreements) are an increasingly common way to resolve employment disputes and/or bring about the end of the employment relationship. Such an Agreement is a legally binding document in which the employee agrees not to pursue a claim against his employer and waives their right to do so and in return receives a sum of money (usually tax-free) as an incentive for doing so.

Will I have to keep details of the Settlement Agreement confidential?

Most likely yes. If you are offered an Agreement then it is advisable not to discuss this with anyone other than immediate family until you have taken legal advice. There are a variety of clauses that are commonly found in Settlement Agreements. These include:
- That both parties will keep the terms of the Agreement confidential and not discuss it with anyone other than specified individuals;
- That neither party will make any adverse or derogatory comments about the other; and
- All property owned by the other must be returned.

What about a reference from my employer?

As part of the Settlement Agreement a reference can be agreed so that you have peace of mind over what your employer will put in any reference they provide when you are looking for your next job.

Should I get a solicitor for a Settlement Agreement?

Yes. The employee must have received independent legal advice from a suitably qualified advisor (usually a solicitor) on the terms and effect of the Agreement in order for a Settlement Agreement to be valid.

How much will it cost?

In almost all Settlement Agreements, your employer will make a contribution towards you getting legal advice on the terms of the Settlement Agreement. The contribution will usually cover our fees. There should be a clause in the Agreement approving this. The typical process is for the solicitor to send their invoice to your employer directly so you do not have to get involved in the issue of paying fees.

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