Settlement Agreements: What employees need to know

We are the right firm to sign your settlement agreement

A settlement agreement will end your employment. The settlement agreement will often include a financial settlement, but usually also includes important duties and obligations on employees. Settlement agreements are negotiable. We explain your rights and have the skills to deal with all aspects of employment such as share awards and post termination restrictions. In most cases your legal fees will be paid to us by your employer.
Here’s a guide to help you navigate the process and avoid pitfalls:

________________________________________

DO: Take legal advice

Settlement agreements are complex documents, and it is a legal requirement for employees to receive independent legal advice before signing. As solicitors will explain your rights and obligations and confirm your position to you. Our fees for dealing with your settlement agreement are paid by your employer. If your fees will be more than the contribution paid by your employer we will discuss with you.

________________________________________

DO: Understand the scope of confidentiality restrictions

Most settlement agreements include clauses that prevent you from disclosing the terms of the agreement, the circumstances surrounding your departure, or other sensitive information about your former employer. Breaching these confidentiality provisions can lead to significant legal consequences.

________________________________________

DO: Consider the impact of covenants you are required to give

Some agreements include restrictive covenants, such as non-compete or non-solicitation clauses, which will limit your ability to work for certain competitors or clients for a set period. We ensure you understand how these restrictions might affect your career prospects.
Often we negotiate such clauses to arrive at a more workable position for you.
________________________________________

DO: Remind yourself of the terms of your employment contract

You need to be alive to confidentiality restrictions and restrictive covenants in your employment contract as well as in the settlement agreement. It is common for employment contracts to include such restrictions, so it is helpful to be aware in case your contract includes anything which may impinge on your future plans. If in doubt you should seek legal advice – though be aware that legal fees in respect of the employment contract are not likely to be covered by the employer’s contribution to costs in respect of the settlement agreement.

________________________________________

DON’T: make derogatory comments

It is common for settlement agreements to include a mutual non-disparagement clause, preventing either party from making negative or damaging remarks about the other. This applies to both private and public statements, including social media posts. Remember that it is possible for things that are true to still be derogatory, so be mindful of what you say/post.

________________________________________

DON’T: Misuse confidential information

Even after leaving, employees are usually bound by ongoing obligations to protect the employer’s confidential information, such as trade secrets, client data, or proprietary systems. Any misuse could lead to legal action and you would have to repay the settlement paid.

________________________________________

DON’T: Ignore the full and final settlement clause

By signing the agreement, you are agreeing not to bring any claims against your employer in the future relating to your employment or its termination. Ensure all issues are addressed and resolved within the agreement before signing.

________________________________________

DO: Keep a signed copy of the settlement agreement

Ensure you retain a signed copy of the agreement for your records. This will help you refer back to the terms and obligations if needed.

________________________________________

Final thoughts

Settlement agreements can be a positive way to move forward from a difficult situation, but they also carry significant responsibilities. By following these dos and don’ts and seeking proper advice, you can ensure a smooth transition and protect your future interests.

For tailored legal advice or further guidance, our team of employment law experts is here to help.