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Settlement agreements that are fair for everyone

These legally binding agreements usually deal with severance pay to avoid a claim being sent to the employment tribunal. A solicitor must fully explain the agreement to both parties to ensure everyone understands the terms.

You will usually start the process for a settlement agreement shortly before or after an employee's termination. The main advantage is that if a settlement can be reached - usually relating to a financial settlement - it stops the case going to tribunal. However it's important for you to look at the potential risk of the employee's claim and judge your offer on this information.

It is also a good idea when an ex gratia payment in being made to negotiate a settlement agreement. 

In order for the agreement to be legally binding, it must:

  • Be in writing
  • Relate to a specific claim as they cannot be used to exclude all potential future claims
  • Confirm that the employee has received independent legal advice (but not from your solicitor)
  • Include the identity of the legal advisor and that an indemnity policy is in place
  • State that the above conditions have been met

Keeping everything organised and clearly defined can save a lot of trouble later, so talk to one of our advisors today.

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For more specific legal advice on settlement agreements, call on 01276 280 40

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