When it comes to handling a settlement agreement with your employer, the process can be a real headache. If you don’t know the ins and outs of law and are unfamiliar with potential loopholes they might try to use, for example, you might end up feeling like a fish out of water. It may even seem like you have nowhere to turn.
This is particularly true if you are not familiar with what makes a contract like this legally binding versus not. There are rules and regulations involved, some that depend on the category in which the agreement is being made. For more information on what makes them an official contract and if there is help available, be sure to continue reading.
What are Settlement Agreements?
I think it’s good to cover the basics before we get into the more complex things, if only to make things simpler via a good basis of knowledge. An agreement like this is a contract between two parties (in the case of this article, I’ll mostly be focusing on an employee and their employer) that resolves a significant conflict and puts an end to it.
Generally speaking, it will involve some form of severance package that they provide to you. This is on the grounds that you will not be pursuing legal action against them in a court. Already, that is a big stipulation to keep in mind, as it is a significant one.
Another thing of note is that usually you are supposed to keep the terms involved private. Employers consider it confidential information. So, revealing that to anyone could result in a violation of contract if this is the case. If you’re unsure, try looking at a website like this one, https://uk.practicallaw.thomsonreuters.com/6-200-3471?transitionType=Default&contextData=(sc.Default)&firstPage=true, for some details on how that works.
What is Involved?
As you can probably anticipate, the proceedings can get complicated. There are many rules or stipulations that you may have to follow. The waiving of your right to bring an employer to court over wrongful dismissal or discriminatory practices is a big one. It may not be something you want to give up in extreme cases, so don’t settle when it won’t be in your favor.
That being said, many of us are looking to just get on with our lives. If that’s the situation that you’re in, there’s nothing to be ashamed of. Sometimes, employment just doesn’t work out, and that’s okay.
When you sign one of these contracts, you are giving up your rights to employment. However, the compensation that you receive is intended to encourage this action. Usually, it includes any outstanding amounts you are owed, any holiday pay that you have accrued but not used up at the time of the settlement, and an additional supplementary fund.
Now, this is all just generalization and probably shouldn’t be taken as legal counsel. Consider looking for experts on settlement agreements if you are in need, as some form of law professional does need to be involved to make it a legally binding contract. Thankfully, there are many firms out there that can assist.
The Fine Print
Deciphering the so-called “fine print” in a settlement can be a complication. There are some nitty-gritty details to be aware of, such as how taxation laws will impact the compensation that you receive. Now, the payments are intended to be free from tax for up to thirty thousand pounds, which falls in line with redundancies.
So, if your employer is trying to shirk any tax responsibilities within this amount, that is certainly problematic. That isn’t the only clause to be cognizant of and watch for, though. One such are any warranties or indemnities embedded in the pages.
What does that mean? Warranties, in legal terms, are statements that are factually true. Meanwhile, indemnities are promises that one party makes to another within documentation. The intention with the later is protection for both members against any potential losses they could face due to the agreement.
You can read more about those in this article, but there is still more. The aforementioned confidentiality clauses are more often than not going to be included. This isn’t something shady, but more insurance for your employer. Information like this probably shouldn’t be going to the public, after all.
What might this entail, though, and are there any warning signs that it is too stringent? You may know it as a non-disclosure agreement as well, which is a term that is widely popularized today due to the publicity some celebrities and internet personalities give it.
They are particularly important given the age that we live in right now. It is important to recognize that data and information have high selling prices. This is particularly true when it comes to competitive businesses, so that is why I say you should expect a section like this.
Finally, there might be something known as a “reference.” In contractual terms, this involves referring to any previous agreements that exist between the two parties. It is usually not something that warrants express concern, though.
How does Legal Binding Work?
If no legal counsel is involved with a settlement agreement, it will not be considered binding. Additionally, if it does not follow the laws set in place surrounding them, it won’t be. However, if those two requirements are filled, it probably is a binding contract.
So, if you’re not sure how to go about this process, you may want to find a legal professional to assist in your endeavors. They can provide valuable advice on the terms of an agreement and decipher that fine print for you if you don’t know how. Many of us don’t, unfortunately, making this entire process a serious pain.
If that’s the case for you, like I said, you might benefit from finding an expert’s opinion. Don’t try to do it all on your own, because you might get taken advantage of in this context. Hopefully, it won’t take too long, and you can get your life back on track!
