Settlement Agreements

Performance, absence, and misconduct management processes can be effective in resolving employment issues. However, these processes can be costly and time consuming.

An alternative available to employers is to offer the employee a Settlement Agreement (previously referred to as a "compromise agreement") once, for example, a performance or conduct issue has arisen. The purpose of a settlement agreement is to provide certainty for both parties. The employee avoids a difficult dismissal and knows exactly how much compensation they will receive, and the employer has peace of mind knowing that no known legal claims will be brought against their business.

Settlement Advice for Employees

For a Settlement Agreement to become binding between the parties, employees are required to obtain legal advice on the terms and effect of the Settlement Agreement presented to them by their employer. The reason why the law imposes this obligation is to ensure that you fully understand the legal implications of signing a Settlement Agreement.

A Settlement Agreement is a legally binding agreement that sets out the terms on which an employee will agree not to pursue any claims against their employer. In essence the employer agrees to make a compensation payment to the employee, and in return the employee agrees to waive any claims they may have against their employer. This is normally offered shortly before or after the termination of employment.

We regularly advise employees on Settlement Agreements to determine if they have any claims against their employers and therefore if the financial package being offered is adequate. We also have a high success rate in assisting employees in negotiating more favourable financial packages, should you feel you are not being adequately compensated.