Settlement agreements

Settlement agreements can be useful tools to help manage the risks of terminating employment or to bring an end to disputes. However, if offered unwisely or at the wrong time, they can cause problems, for example by:

  • exposing the organisation’s negotiating position at the wrong stage;
  • creating potentially admissible evidence that the organisation has decided to terminate the relevant employment; and
  • contributing towards a culture of buying people off, rather than dealing with the underlying issues.

Using standard settlement agreements without tailoring them to the organisation and the specific circumstances can also lead to costly difficulties, such as through:

  • specific claims not being covered, potentially resulting in agreements which are not fully enforceable; or
  • lack of attention to the conditions which must be complied with before a settlement payment becomes due, potentially resulting in settlements being reached on the basis of incomplete or incorrect information.

Using standard settlement agreements may also result in important opportunities to build in extra protection for the business from unfair competition, breach of confidentiality or reputational risks.

Examples of our assistance to employers in this area include:

  • drafting and tailoring settlement agreements
  • negotiating the terms of settlement agreements
  • where necessary enforcing settlement agreements in the Courts and Tribunals.