Settlement Agreements

The breakdown in a working relationship is always difficult to manage in a way which will be satisfactory to all parties. It may be that the issue is not one that lends itself to disciplinary action, or capability hearings, which of course can take many months to resolve. The law recognises that in particular circumstances it may be  mutually beneficial to both parties to negotiate an exit from the business on agreed terms rather than through conflict. The Settlement Agreement is a legal device available to employers when negotiating a severance arrangement with an employee. The content of the Agreement must incorporate those matters which fall in the contemplation of the parties as being potential areas of claim, but cannot be a simple denial of all statutory employment rights. This may be preceded by a 'protected conversation' with the employee, which if conducted properly should result in that discussion not being referred to in any subsequent legal proceedings, were they to arise. 

As regards the agreement itself, this follows a statutory format but with a number of variable terms, conditions and clauses which make the drafting of them a task for a qualified lawyer. Matters such as agreed references, confidentiality clauses, return of property, tax payable on relevant sums etc all need careful consideration.