Why You Need A Reasonable Settlement Agreement

If you are an employer or an employee, it makes plenty of sense to know a few things about employment law. As you probably know, ignorance of the law is not an excuse so it pays to know the law so that you do not break it unwittingly. If you ever have to answer the question: what is a reasonable settlement agreement, you should be able to give a number of sensible answers. In this article, we are going to look at reasonable settlement agreements, what they are, how they work and why you might need one. 

What is a Reasonable Settlement Agreement?

A reasonable settlement agreement can be described as a legally binding contract that the employer and the employee enter voluntarily. The purpose of this agreement is to forgo your right to sue the employer or take the employer to an employment tribunal. In addition, signing this agreement also means that that you simply accept the agreement you have reached with the employer and relinquish some other rights you might have as an employee. Below are some things you should know about the reasonable settlement agreement.

Why the Employer Needs the Agreement

In many instances, the employer initiates this agreement to avoid time-consuming and potentially costly litigation. This implies that the employer might be liable to prosecution by the employee and wants to avoid this. From the perspective of the employer, this agreement makes sense because it protects the image of the employer as an individual. It also protects the reputation of the company. Again, this agreement means the employer does not have to pay the maximum benefit to the employee so it also helps the employer save a bit of money. 

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Benefits for the Employee

As an employee, this agreement helps you get a reasonable financial settlement without too many hassles. First off, you get an amount that is much higher than the statutory minimum. In addition, this agreement allows you to leave the workplace on a clean slate before matters escalate to the level where employer and employee are near-enemies. Again, taking the agreement ensures you get a lot of cash tax-free because this agreement comes with certain tax concessions. Another huge benefit is that this agreement spares you the time and the cost of a complicated litigation which may not even end in your favour. In most cases, this agreement means you get excellent references from the employer and this is vital in case you want to apply elsewhere. 

Settlement or Compromise Agreement

In the past, the settlement agreement was called a compromise agreement. However, the name was changed because the parties to this agreement did not want to come across as compromisers. In certain quarters, the settlement agreement still goes by the old name of compromise agreement.

Final Word

As you can see, the reasonable settlement agreement offers many advantages to both the employer and the employee. It is an excellent agreement because it makes it possible for employer and employee to part on amicable terms even if they had some disagreements in the past.