Settlement Agreements
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What is a Settlement Agreement?
A settlement agreement is a contract that is legally binding, made between an employee and an employer. The agreement settles any claim the employee may have against an employer which is usually in exchange for an enhanced payment.
What are the key clauses in settlement agreements?
For an employee, the key clause in a settlement agreement will usually be the one around compensation for loss of employment. For an employer, the key clauses will be that which prevents any future employment tribunal claims, and perhaps if appropriate, some clauses restricting the employee from going to work for a competitor in future.
What are the benefits of a settlement agreement?
A settlement agreement ties up all of the issues between an employer and an employee around their employment and the termination of their employment. For an employer, it gives confidence that there will be no further claims. For an employee, the benefit will usually be some form of compensation for the termination of their employment.
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Why do I need an employment solicitor?
In order for a Settlement Agreement to be legally binding the employee must seek legal advice. The employer usually bears the cost of the advice and the employer is free to choose any solicitor they wish.
How long does it take to agree a settlement agreement?
We can usually complete a settlement agreement within a few days. However, if there are negotiations to be had between the employee and the employer it is likely to take longer.
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Holly is a Member and Head of Mullis and Peake’s Dispute Resolution Department
Martyn ​is our Chairman and the firms' Compliance Officer for Legal Practice
