A Settlement Agreement is a legal document signed by an employer and an employee under which an employee agrees not to file a suit against the employer. Whether the employee waives the right to bring a claim against discrimination, wrongful dismissal, or unfair dismissal, this is often followed by a termination payment from the employer.
Settlement Agreements are also signed by workers who waive their right to paid holiday. Usually, this type of agreement is signed to bring the employment relationship to an end. You can download a ready-made Settlement Agreement template below or compose a more personalized document using our online form builder.
Each type of settlement has its own rules and benefits so you are free to negotiate their terms and conditions depending on your needed circumstances:
A sample Settlement Agreement between two parties has to include the following information:
Just like any other contract, a Settlement Contract may be void if it is not valid, to begin with. A valid contract means that two or more parties entered freely into an agreement with a promise to do something in return for a benefit. In the absence of any one of these elements, the entire contract becomes void.
Additionally, if a breach of contract violates the very heart of the agreement - for instance, the employer does not give the employee a check immediately upon signing a lump sum Settlement Agreement, the entire contract becomes void. A court of law may also find the contract void if the agreement was obtained without the free consent of either party, for example, through fraud, coercion, duress, or misrepresentation.
If either party breaches a Settlement Agreement, for example, an employee takes legal action or an employer fails to pay, the wronged party may send a Breach of Contract Notice and later file a counterclaim for the breach of contract. Generally, a court awards the non-breaching party damages for losses suffered as a result of the breach. If your Settlement Agreement contains an enforceable repayment clause, the employee who breached the contract may be ordered to repay all money already received, along with the legal fees incurred by the employer.
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