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29 Mar 2023

Employment

What Are Settlement Agreements?

If you're involved in an employment dispute, a Settlement Agreement could be the best course of action.

What are settlement agreements

A Settlement Agreement, once referred to as a Compromise Agreement, is a written ‘legal contract’ entered voluntarily by employers and employees.

Settlement Agreements are generally used to resolve disputes or end employment and are used to reach an outcome that is mutually acceptable for both parties involved. 

Settlement Agreements are used in a variety of different circumstances, such as a breakdown in the relationship between employer and employee whereby ‘a ‘clean break’ is the best way forward’.

For instance, if you have a complaint against your employer, a way to avoid an expensive and time-consuming Employment Tribunal is through a Settlement Agreement. 

As every case is unique, there are some circumstances where a Settlement Agreement is not the most appropriate option. As such, it’s important to seek legal advice and support to determine the best course of action in your situation. 

That said, there are many benefits associated with Settlement Agreements that you might not be aware of.

The benefits associated with Settlement Agreements include, but are not limited to:

  1. They offer a certain outcome
  2. They can be cost-effective for both parties
  3. Settlement Agreements offer confidentiality  
  4. Cases can be resolved more quickly 

1. They Offer A Certain Outcome

Arguably one of the largest benefits associated with Settlement Agreements is that they offer a certain outcome. 

There’s a lot of uncertainty that surrounds the outcome of any litigation, which is why many people would prefer to avoid an Employment Tribunal. Evidence can be brought to light that can take a case in an entirely different direction at the last minute, emphasising how unpredictable they can be. 

Bearing this in mind, the risks associated with Employment Tribunals can be avoided under a Settlement Agreement as they offer a certain outcome, providing employers and employees with peace of mind by coming to a mutual agreement.

2. They Can Be Cost-Effective For Both Parties

Another benefit associated with Settlement Agreements is that they can often be more cost-effective in the long run for both employers and employees. 

There’s no denying that Employment Tribunals are not only expensive but are also a time-consuming process.

It’s important to note that with a Settlement Agreement, employers have some control over the compensation. While in many cases, an employer will not make their fairest offer straight away, seeking legal advice can help individuals to negotiate an increased settlement and achieve the result they deserve.

On the other hand, when it comes to an Employment Tribunal, employers won’t have the same control if the case finds in favour of the employee and awards compensation as a result of that. 

At Harding Evans, if the offer made by an employer is fair, we can help individuals proceed with the Settlement Agreement in an efficient manner to minimise legal expenses.

As such, both parties stand to save a lot of money by opting for a Settlement Agreement.

3. Settlement Agreements Offer Confidentiality

Another benefit is that Settlement Agreements is that they offer confidentiality, helping to protect a business’ reputation.

Settlement Agreements can ensure confidentiality is maintained in the form of specific clauses that are written in the Settlement Agreement and then signed by the former employer.

For instance, a Settlement Agreement could include a clause to prevent the former employee from making derogatory remarks about a business, in turn helping to ensure confidentiality is maintained. 

If this clause is broken, then, and the employer can prove what the employee has said about the business, the employee would be in breach of the Settlement Agreement.

4. Cases Can Be Resolved More Quickly 

A significant benefit of Settlement Agreements is that cases can often be resolved more quickly. 

While many factors determine how long a claim can take, from start to finish, you can expect the Employment Tribunal process to take anywhere from several months to a year or longer.

When you compare this to the fact that 10 calendar days is considered a reasonable period of time to consider a Settlement Agreement, Settlement proceedings tend to be significantly shorter.

As such, cases can be resolved more timely and efficiently, helping both parties to save more time and money.

How We Can Help

At Harding Evans, our team of experienced solicitors are on hand to solve any employment issues you might be experiencing.

To establish whether a Settlement Agreement is relevant to your circumstances, or if you’re seeking advice on the process that’s involved, get in touch with a member of our team today.

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