Settlement Agreements can be used in a variety of areas of law. They are more commonly known to be used in litigation in the areas of Employment, Boundary, Property and marital Family matters.
A Settlement Agreement is commonly a document which outlines the nature of dispute but facilitates an agreement reached between the disputing parties to resolve the dispute. It is a legally binding contract between the parties.
Within the context of Employment law, there are many situations outside of a disputed context where a Settlement Agreement can also be used usually when your employment is coming to an end. An employer may voluntarily provide a Settlement Agreement to avoid for example being involved in an extended redundancy, disciplinary or performance related process.
Settlement Agreements can be used before the instigation of legal proceedings, or if legal proceedings have commenced in a Court or Tribunal, they can still be used to record the resolution of the matter, but it would then need the Judge to approve the settlement.
These agreements are used to save costs and time associated with the legal process, and used where there is risk/ uncertainty of the outcome of going through the legal process.
In order for there to be an agreed Settlement Agreement, the parties would have to go through a negotiation. This can be done between the parties themselves, or through correspondence between their lawyers, or can be done through a Mediation.
If at the end of the negotiation there is an agreement, full details of the nature of the dispute/ claim and the details of settlement commonly referred to as “Terms” are recorded within the Settlement Agreement.
If the dispute cannot be resolved through negotiation, the parties would need to proceed through either the Court or Tribunal to determine the outcome of the dispute. However, within the context of Employment law if an agreement cannot be reached, although dependent on the specific circumstances the employer may bring the employee back to work and commence for example a formal disciplinary or redundancy process.
Settlement Agreements are very useful to avoid lengthy disputes and the costs associated to deal with them. Advice should always be obtained regarding their merits in each specific context and their implications.
