If you have had to terminate the employment of one of your staff, whatever the reason for their employment ending, you may want to consider a settlement agreement.
By signing a settlement agreement, the departing employee agrees not to bring any legal claims against the business. Because of this, they can be really useful ways of giving you peace of mind that you are not going to be met with costly employment claims after an employee has left.
As you can imagine, if your departing employee is going to give up their rights to bring a claim, they will typically want something in return. Typically this takes the form of a one-off payment to the employee, which is provided for under the settlement agreement and which may even be tax free up to certain limits. The amount of the payment is whatever you and the employee agree is fair. In circumstances where you are confident that the employee has no claims against you, it is likely that the payment will be smaller. If you have any concerns that the employee might be able to bring a successful claim, you may want to offer more.
How we can help
If you have recently ended the employment of one of your staff, or you think you may need to do so soon, and you think that a settlement agreement might be of benefit, please contact our Employment team, and we can advise whether we think a settlement agreement would be right for you, and if so, can prepare a draft for you.
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