What is a Settlement Agreement and why would I need one?
Posted on 15th July 2024
When attempting to understand and deal with the complexities of workplace disputes or the termination of employment, many individuals and their employers might opt for a settlement agreement as a means to a mutually agreeable resolution. A common concern for employees in this situation is whether signing such an agreement will restrict their ability to make future claims against their employer. Understanding the implications of a settlement agreement is crucial before making a decision, and this blog from our Settlement Agreement Employment Solicitors aims to shed light on this subject.
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What is a Settlement Agreement?
A settlement agreement, sometimes referred to as a compromise agreement, is a legally binding document between an employer and an employee. Under this agreement, the employee typically agrees to waive their right to bring most legal claims against their employer, often in exchange for a sum of money or other benefits. These agreements are commonly used to resolve disputes or to agree on the terms of an employee’s departure, to ensure that both parties have a clean break from one another.
How does a Settlement Agreement impact future claims?
The core purpose of a settlement agreement is to provide a clean break between the employer and employee, preventing the employee from bringing future legal claims related to their employment or its termination. The specific claims that are waived will be listed in the agreement itself and can include:
Unfair dismissal
Discrimination claims
Wage and hour claims
Breach of contract
Why choose MG Legal Solicitors?
Transparent fees.
Our solicitors offer their services on a clear fixed-fee or hourly rate, and accept personal injury claims on a no win no fee basis.
We are the experts.
Here at MG Legal, our team of friendly solicitors are fully-qualified and have over thirty years' experience in helping clients just like you.
Regular communication.
When you work with MG Legal, your solicitor will be in regular contact so you have step-by-step updates.
Multiple office locations.
If you are looking to instruct our solicitors, we have offices in Garstang, Longridge, Lancaster, and Lytham for your convenience.
It’s important to note that not all future claims can be waived through a settlement agreement. Claims that cannot typically be waived include:
Personal injury claims that the employee was not aware of at the time the agreement was signed
Accrued pension rights
Future claims that arise from unlawful acts by the employer after the date of the agreement
Do I need legal advice before entering into a Settlement Agreement?
Due to the significance and potential ramifications of waiving your rights, it is a requirement under many settlement agreements for the employee to receive independent legal advice before signing a settlement agreement. A settlement agreement employment solicitor will review the agreement, and advise you on it, to ensure you understand the rights you are waiving and the implications of the agreement. They can also, in some cases, negotiate on your behalf to ensure that the compensation and terms are fair and reflect the value of the claims you are waiving.
The terms of a settlement agreement are not always set in stone and can be negotiated, although in many cases our Settlement Agreement Employment Solicitors find that the employer and employee have agreed terms before the agreement is finalised and we are instructed. This includes not only the financial compensation but also which claims you agree not to pursue. If there are specific concerns or potential future claims you wish to retain the right to bring, these can often be carved out of the agreement with the right legal advice and negotiation.
In summary, signing a settlement agreement does generally prevent you from making future claims against your employer related to your employment or its termination. However, the exact nature of the claims you are waiving will be detailed in the agreement itself. Due to the binding nature of these agreements and their potential to significantly impact your legal rights, obtaining comprehensive legal advice before proceeding is essential. A skilled settlement agreement employment solicitor can guide you through the process, ensuring that your interests are protected and that you make an informed decision about entering into the settlement agreement. Remember, the aim of a settlement agreement is to find a resolution that both parties can accept, allowing everyone to move forward.
For expert advice, contact our settlement agreement employment solicitors on 01772 783314 or email enquiries@mglegal.co.uk, and arrange to speak with our expert team today.
Tagged as: Settlement Agreements
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