Settlement agreements in employment disputes

Unfortunately, there may be a time in any employment relationship where things must be brought to an end.

Employment law in this country is complex, and the ending of the employment relationship may entitle the employee to various claims (not only under the contract of employment, but also under the law generally). Accordingly, we would always recommend that legal advice is sought before terminating someone’s employment.

If the parties agree, the best way of dealing with potential claims from the employee that are a concern for the employer is for the employer and employee to enter into a settlement agreement.

Typically, under a settlement agreement, the employee will agree to waive all claims relating to their employment and its termination in exchange for receiving a lump sum of money from the employer (some or all of which may be payable tax free). So, if drafted correctly, the settlement agreement can be seen as a win-win.

To be legally binding, the employee will need to take legal advice on the settlement agreement from an independent solicitor who has no links to the employer.

For advice on employment matters, please contact David Nathan on 020 7822 2222 or at [email protected]