What is a Settlement Agreement?
A settlement agreement is a binding contract between the employer and employee which is created to ease the process of employment termination. These are often created if an employer is not happy with the employee’s performance or the employee thinks circumstances have changed and the job role is no longer a good fit. These agreements, if negotiated correctly, should have a beneficial outcome for both the employer and employee. They can include specific terms to ensure the employee leaves the business quietly, doesn’t discuss the reasons for their departure or agrees not to work for competitors and to ensure the employer agrees to the financial recompense which will be paid and what will be communicated to the business as the reason for the employee leaving.
It is important to note that if you sign a settlement agreement and accept its terms, you are relinquishing your right to make a claim against your employer at a later date, in a Court or an Employment Tribunal and remember, you cannot be forced to accept a settlement agreement. It has to be mutually agreed so it is important to know what should be included.