Settlement Agreements are legally binding documents once they have been signed by both parties. It is therefore crucial to understand the potential consequences if the Settlement Agreement is breached. Either party may breach the Settlement Agreement, but there are consequences either way. The party that has been wronged may be permitted to bring a claim for breach of contract.
How can a Settlement Agreement be breached?
A Settlement Agreement may be breached in several ways. For example, the employer fails in their duty to pay the agreed sum to the employee, the employee may fail to fulfil their warranty under the Settlement Agreement, or the employee may find that the restrictive covenants contained in the document have been breached by the employee; for example, if the employee sets up a conflicting business or attempting to solicitor former clients of the employer.
What can the innocent party do when the Settlement Agreement is breached?
If a party breaches the Settlement Agreement, then the other party may decide to:
· Seek enforcement of the terms; and/or
· Bring a claim for breach of contract and seek damages.
If Employer breaches the Settlement Agreement
If it is the employer that has breached a Settlement Agreement, then the employee may opt to bring a claim for breach of contract against their employer with the aim of obtaining compensation for the losses suffered due to the Settlement Agreement’s violation.
In order to do this successfully, the employee would need to:
· Prove a legally binding contract existed;
· Demonstrate the other party failed to fulfil their side of the contract; and
· Prove that losses were suffered due to the breach.
If the Employee breaches the Settlement Agreement
If the Settlement Agreement is breached by an employee, they may be required to repay some or all of their settlement money as well as the employer’s legal fees incurred due to the breach.
If a party believes a Settlement Agreement has been breached, it is important to seek professional legal advice as soon as possible.
The team at Carter Bond Solicitors are specialists in advising both employees and employers and can be contacted on 020 3476 6751 or by email info@carterbond.co.uk
This note comprises the view of the author at the time of writing. This note is not a substitute for legal advice. Information may be incorrect or out of date and may not constitute a definitive or complete statement of the law or the legal market in any area. This note is not intended to constitute advice in any specific situation. You should take legal advice in specific situations. All implied warranties and conditions are excluded, to the maximum extent permitted by law.
