Settlement Agreement Employment Rights Act 1996: Understanding the Basics
Settlement agreements, also called compromise agreements, are legal contracts between an employer and employee that settle claims the employee may have against the employer. The terms of the agreement usually include a financial settlement in exchange for the employee agreeing to waive certain rights, such as the right to sue the employer for wrongful termination or discrimination.
The Employment Rights Act of 1996 governs the use of settlement agreements in the United Kingdom. Here are some important things to know about settlement agreements under the act:
What claims can be settled?
A settlement agreement can settle any claims an employee may have against their employer, including claims for unfair dismissal, discrimination, breach of contract, and unpaid wages. However, certain claims cannot be settled, such as claims for personal injury or claims for statutory rights that cannot be waived by law.
When can a settlement agreement be used?
A settlement agreement can be used at any stage of an employment relationship, including during employment, when an employee is being terminated, or after an employment relationship has ended. However, there are important legal requirements that must be met for a settlement agreement to be valid.
What are the legal requirements for a valid settlement agreement?
The following requirements must be met for a settlement agreement to be valid:
– The agreement must be in writing
– The agreement must relate to a particular complaint or proceedings
– The employee must have received independent legal advice from a qualified lawyer
– The lawyer must have professional indemnity insurance
– The agreement must state that the statutory requirements have been met
– The employee must have signed the agreement voluntarily
What happens if the requirements are not met?
If the requirements for a valid settlement agreement are not met, the agreement will not be legally binding. This means that the employee can still bring a claim against the employer in court or an employment tribunal.
What are the benefits of using a settlement agreement?
Settlement agreements can provide benefits for both employers and employees. For employers, settlement agreements can provide a way to avoid the cost and uncertainty of litigation, maintain confidentiality, and preserve business relationships. For employees, settlement agreements can provide a financial settlement, a positive reference, and a smooth transition to a new job.
In conclusion, settlement agreements can be an effective way to settle disputes between employers and employees. However, it is important to ensure that all legal requirements are met to ensure the agreement is valid. If you are an employer or employee considering a settlement agreement, it is recommended that you seek the advice of a qualified lawyer who is experienced in employment law and settlement agreements.
