A settlement agreement is a legally binding contract between an employer and an employee that sets out the terms for ending employment or resolving a workplace dispute. Typically, the employee receives compensation in return for agreeing not to bring future legal claims against the employer.
These agreements are often used to bring employment relationships to an amicable close, helping both sides avoid the cost, time, and uncertainty of employment tribunal proceedings. They can also include terms such as confidentiality clauses, final payments, and agreed references.
For a settlement agreement to be legally valid in the UK, it must be in writing and the employee must receive independent legal advice before signing.
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