Settlement Agreements are legally binding contracts that employers use to outline the agreed conditions for either resolving a dispute or ending the employer/employee relationship. Usually, the terms of the Settlement Agreement involve offering a payment to the employee in exchange for waiving their right to take their claim to tribunal.

Must an Employee Sign a Settlement Agreement?

Employees are under no obligation to sign any Settlement Agreement proposed by their employer. However, they do have a right to negotiate their own terms. While some employees seek to obtain as much financial compensation as possible, others prefer to minimise restrictions such as restrictive covenants following on from the end of their employment relationship.

How is a Settlement Agreement Negotiated?

To negotiate your Settlement Agreement effectively, the first step is to instruct a solicitor who specialises in this field. They can help you to understand the implications of all the terms that your employer is offering. They can also give you the advice you need about any possible complexities, pitfalls and risks you could face. It is important to note that it is a legal requirement to take advice from an independent legal professional before you sign the Settlement Agreement.

How Do I Achieve the Best Possible Settlement?

Although it can be tempting to push for your own demands when negotiating a Settlement, you should consider what your employer is looking for. Usually, they prefer your exit to be straightforward, with the company’s affairs remaining confidential. It may be worth agreeing to your employer’s requests in exchange for achieving your deserved settlement.

Taking a realistic approach to negotiations is essential. Looking for a settlement over and above what you could reasonably expect to obtain through a tribunal will be unlikely to succeed. If you are seeking a Settlement because of an employment dispute, you should avoid resigning until you have obtained legal advice as it could weaken your position in terms of negotiation.

Your solicitor will be able to help you understand the implications of any Settlement Agreement and enable you to decide whether it is a good choice for you or whether you should aim to negotiate further.

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