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settlement agreement

What is a Settlement Agreement?

A settlement agreement is a legally binding contract between an employee and employer and is used to settle all claims a worker might have against their boss.

Most of the time, the settlement agreement is used alongside ending a given contract, though that must not be the case.

It is also possible to use a settlement agreement amid ongoing employment, but there is a need to settle an issue about both parties. In this article, we aim to lift the lid on all you need to know about the settlement agreement.

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When Can Settlement Agreement Be Used?

The settlement agreement can be used in an instance where there is a need to terminate an employment or relationship between an employer and employer since it has become dysfunctional. Most of the time, the agreement is applied as the only applicable way to solve a dispute between a worker and their boss.

Can I negotiate a better deal?

If you hire a solicitor, he/she will work with you to devise a strategy for fair negotiation. You can still use free online resources to find tips that can be used in any negotiation. Before you commence the negotiation process, you want to think about your rival’s anxieties and motivations carefully.

There is a good chance that your opponent might be worried about bad publicity or the cost of defending litigation. Also, your rival might be anxious about getting a bad reputation linked with not paying people off.

In such cases, your so1icitor will propose changes to the agreement to provide an employer with an assurance that the issue at hand will be kept confidential. Stay calm and prevent things from getting personal, and you are free to inform your solicitor if you find your opponent’s behaviours oppressive or underhand.

What Claims Can Be Waived?

Many legal claims about contractual and statutory rights might be waived as part of the terms agreed on in a settlement agreement. This includes discrimination, unfair dismissal, unlawful payment deductions, etc.

However, you must understand that the method cannot be used to settle all issues. These include claims personal injury, and claims of accrued pension that have not arisen at the time of the agreement, as well as claims as a result of breach of the agreement itself.

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How Are Terms decided in The Agreement?

It is a must that the terms of the settlement agreement are mutually agreed between employee and employer. Once that is done, the terms are made available in a written document, and it will accurately identify the claims for which the employee agrees not to seek in exchange for the mutually agreed payment.

Not that an employer cannot forge the same terms and apply them to different employees at the same time. All the time, each employee must only agree to terms that specifically suit them and their working condition. As such, they must have an individual agreement that is indicated in a written document.

Each settlement agreement used must be customized for specific employee and employer based on individual circumstances. Also, they must feature clearly expressed waivers of given claims that the worker has.

Does I Have to Provide a Reference?

The employee must be issued with a reference, and that is part of the negotiations. If as an employer, you agree to this, then the reference has to be attached right at the end of the settlement agreement. Note that a third party must not influence this agreement, and if by any chance this happens, the employee has the right to decline the terms of the agreement.

Is There a Need for Independent Legal Advice Before Signing the Settlement Agreement?

It should be clearly understood that unless a worker has received adequate legal advice about it, a settlement agreement is not legally effective. If you are the employee, most of the time, your employer will agree to take care of your legal fees, but there is a good chance they will not cover all your costs.

If you are dealing with a complex issue, or there is a need for your solicitor to have a negotiation with your employer, then you might incur higher legal fees. We recommend that for you to get a better deal, try to take care of the legal fees on your own. Also, before your solicitor starts to negotiate on your behalf, they must discuss their fees with you.

Do I Have to Accept Settlement Agreement?

No. It is not mandatory that you accept the settlement agreement. However, based on the situation, your boss can still suck you fairly. Remember, turning down the offer does not mean you will get a better one. The good thing is that if you feel that your employer has treated you unfairly, it is still possible to make a claim after turning down the agreement.

The only difference is that you will not be given as much money as you were initially offered. Have in mind that both parties must validate the terms of the agreement. Thus, you are advised to work with a solicitor, and they will help you know what would be reasonable in your situation.

If you agree to take advise from a solicitor, but ends up turning down the agreement, you will still have to pay the solicitor’s fees. Your employer will only take care of the fees if you agree to the terms of the settlement agreement.

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Which Claims Are There to Be Settled?

All settlement agreements are designed to settle each sort of claim that you might have against your boss. This implies that you agree to surrender your rights to bring contractual and statutory claims as well as claims for personal injury.

However, you want to bear in mind that certain claims are impossible to waive even when there is a settlement agreement. Personal injury that was there without your knowledge when signing the agreement is the most common example.

When you sign the settlement agreement, you must know that it draws a solid line between everything that has ever happened between you and the employer, so you will not be able to bring any sort of claim against them.

What Is an Agreed Reference?

In some cases, a settlement agreement might entail a promise by your employer that if they are asked to provide a reference about you, they will willingly do so. Note that the wording of this reference might also be agreed upon, alongside the settlement agreement. Therefore, you should be fully aware of what is entailed in the promise made by your employer. You have the right to either decline or agree with the promise that your boss has made alongside the settlement agreement.

The Bottom Line

We hope that this information helps you make a sound decision on whether to accept the settlement agreement. However, the information in this piece must not be treated as specialist legal advice based on your situation. Thus, if you have been presented with a settlement agreement, and are unsure whether to agree, make sure to get in touch with an expert, and they will help you make the best decision based on your situation. If you have further question, do not hesitate to contact us since we are always ready to help.

Call us on 03300100073 to find out how we can help you with a settlement agreement
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