What are the benefits of a settlement agreement?

There are many benefits to using a settlement agreement if you are an employer, as well as if you are an employee.

The major benefit for employers is the fact that after terms have been agreed, they are therefore safeguarded against an employee pursuing a claim against them in the Tribunal regarding the terms of their employment termination.

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Settlement agreement benefits

In addition, there are a number of other factors that can be included in the wording of a settlement agreement that benefit both parties including:

Avoiding bad publicity - A settlement agreement may state that neither the employer nor the employee can say anything bad about each other. This could help safeguard the employee from losing out on jobs due to bad references and the employer from losing clients due to the ex-employee bad mouthing the company.

It allows the employee to leave on good, mutually agreed terms - This can be an extremely positive thing that allows the employee and the employer to get what they want out of the situation and avoid an escalation of any issues.

Management/admin costs are greatly reduced - The cost of taking a claim to Tribunal or defending a claim can be prohibitive and the outcome can be uncertain. A settlement agreement helps both parties avoid these costs and achieve a positive outcome without the need for issuing proceedings.

Confidentiality - Confidentiality is ensured and enforced by a settlement agreement. Confidentiality is particularly important when it comes to sensitive information such as the circumstances leading to the termination of employment as well as the payment that was offered. This protects both parties.

Whether you are an employer or an employee, it is in your best interest to ensure your rights are protected. A failure to set out a settlement agreement appropriately could mean that your business or your career is compromised. With this in mind, all settlement agreements must be approved by an independent legal adviser. This is a legal requirement, meaning a settlement agreement can only be enforced once a solicitor is happy that the employee understands the ramifications of their agreement.

It’s vital that you seek advice from a legal team experienced in handling settlement agreements to ensure you are protected. For more information contact the expert settlement agreement solicitors at Stephensons today on 0203 816 9302 or complete our online enquiry form

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