Settlement agreements are usually offered by an employer as a means of settling a dispute or to offer favourable financial terms to an employee to leave employment. In assessing whether a settlement agreement is the right decision for you, it is necessary to consider the alternatives.
Workplace disputes can take many different forms – for example, a personality clash between a manager and a direct report or a discrimination case where proceedings in the tribunal are ongoing.
When is a Settlement Agreement appropriate and is it the right choice for you? Alternative means of resolving the dispute should always be the focus to avoid legal proceedings, and here’s why.
Here are the reasons why a settlement agreement is the right decision:
1. Legal proceedings are expensive
Employment law involves complex legal concepts often involving the interpretation of contracts, discrimination legislation and a significant time reviewing evidence, preparing witness statements and attending court. At every stage of the litigation process, settlement should be considered, and the parties should engage to see if it is possible to reach acceptable financial terms.
2. The Legal process is uncertain
There is no such thing as a cast-iron case – the parties’ versions of events will vary significantly and often a judge will need to determine whose evidence they prefer. Lawyers assess whether a case has reasonable prospects of success, i.e. more than a 51% chance of winning, and the level of litigation risk which takes into account factors like the unpredictability of how 1) the evidence is given 2) the law is interpreted. In common with most parts of our lives, we want to remove risk and in workplace matters engaging in discussions to lead to settlement will be part of managing the risk factors involved in the litigation process.
3. Lengthy court proceedings stop you from moving on with your life
When you experience unlawful conduct at work, it will very likely have affected you significantly – not least because the sudden loss of employment will cause financial hardship. Our identities and self-esteem are often bound up with our professional lives and any flux is likely to cause an impact on health and wellbeing. Resolving matters through a settlement agreement will help you move on with your life with appropriate compensation for your financial losses and will help you focus on your next role.
4. When you are offered the right amount
It is often difficult to assess the appropriate level of compensation when you have been badly treated, particularly when you have lost a job that you enjoyed. Lawyers often consider if an offer is within an appropriate range. It is not uncommon for employees to have high expectations and overvalue their case. Ultimately, assessing whether a settlement agreement is the right choice will depend on whether the amount being offered is a compromise you are prepared to make. Usually, a specialist employment lawyer will help you make this assessment and the other factors we have looked at above, will be taken into account.
