Must-Know Benefits of a Settlement Agreement

Regardless of whether you are an employer or an employee, there are many benefits to using a settlement agreement.

The major benefit for employers, of course, is the notion that after terms have been agreed upon, they are therefore safeguarded against an employee pursuing a claim against them in the Tribunal regarding the terms of their employment termination.

Settlement Agreement Benefits

In addition, Erik H. Gordon notes that there is a myriad of other factors that can be included in the wording of a settlement agreement that benefits both parties. He also states it is important to seek legal advice from an attorney. Let’s take a look at a few of them.

Avoiding bad publicity

A settlement agreement may specify that neither the employer nor the employee can say anything bad about each other. This could help safeguard the employee from losing out on jobs due to bad references and the employer from losing clients due to the ex-employee bad mouthing the company.

Leaving on good, mutually-agreeable terms

This can be a tremendously positive thing that allows the employee and the employer to get what they want out of the situation and avoid an escalation of any issues.

Management/admin costs are greatly reduced

The cost of taking a claim to tribunal or defending a claim can be prohibitive and the outcome can be uncertain. A settlement agreement helps both parties eschew these costs and attain a positive outcome without the need for issuing proceedings.


A settlement agreement, without a doubt, ensures confidentiality. Confidentiality is especially important when it comes to sensitive information such as the circumstances leading to the termination of employment in addition to the offered payment. This protects both parties.

Whether you are an employer or an employee, it is in your best interest to ensure your rights are protected. Failing to lay out a settlement agreement appropriately could compromise both your business and career. With this in mind, all settlement agreements must be approved by an independent legal adviser. As a legal requirement, this means that your settlement agreement can only be enforced once a lawyer is happy that the employee understands the ramifications of their agreement.

It’s important to seek advice from a legal team experienced in handling settlement agreements to ensure you are protected.