Settlement agreements

Stephen SimpsonEditor's message: Exiting an employee from your organisation can be a lengthy and uncertain process. However, a settlement agreement can offer an easier and potentially more cost-effective route to terminating the employment relationship.

A settlement agreement is a legally binding document that offers the employee a financial settlement in return for a clearly expressed waiver of any potential claims. It should contain a thorough breakdown of the payments being offered and commonly sets out what references will be provided, confidentiality, and a “non-disparagement clause”.

The statutory requirements include that the agreement be in writing and that the employee has obtained independent legal advice before signing it.

Stephen Simpson, principal employment law editor

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