Editor's message: Exiting an employee from your organisation can be a lengthy and uncertain process. However, a settlement agreement can offer an easier and potentially more cost-effective route to terminating the employment relationship.
A settlement agreement is a legally binding document that offers the employee a financial settlement in return for a clearly expressed waiver of any potential claims. It should contain a thorough breakdown of the payments being offered and commonly sets out what references will be provided, confidentiality, and a “non-disparagement clause”. The statutory requirements include that the agreement be in writing and that the employee has obtained independent legal advice before signing it.
High-profile cases on the use of confidentiality clauses (also known as "non-disclosure agreements") to silence victims of unlawful harassment or discrimination in the workplace have prompted the Government to review their use in settlement agreements. The proposals include that confidentiality agreements will not be able to prevent individuals from reporting crimes, harassment or discrimination to the police.
These reforms may prompt organisations to address any unacceptable behaviour and practices in the workplace, instead of masking the repercussions with a settlement agreement.
Stephen Simpson, principal employment law editor
Updated to include information on the Government's proposal to legislate on the advice required for a confidentiality clause in a settlement agreement.
Updated to include information on the Government's proposals to legislate on confidentiality clauses in settlement agreements.
July 2019 saw progress made on an unusual number of proposed employment law changes. The Government published consultations covering workplace sexual harassment, statutory sick pay, family-friendly leave and pay, flexibility in working hours, modern slavery statements, and enforcement of worker rights. It also made announcements on changes to the laws on rehabilitation periods for offenders, settlement agreements, and protection against redundancy during pregnancy and maternity leave.
Updated to reflect that the Government has published its response to its consultation on confidentiality clauses.
Non-disclosure agreements should not be used to prevent employees from discussing allegations of discrimination and harassment with other staff, while any new laws governing their use should still protect victims' right to "move on with their lives", MPs have said.
We are joined by Nick Chronias, partner at DAC Beachcroft LLP, to discuss how to negotiate a successful settlement agreement, from the initial conversation with an employee to termination.
The Government consults on proposals to limit the misuse of confidentiality clauses in situations of workplace harassment or discrimination.
Non-disclosure agreements (NDAs) and confidentiality clauses that attempt to conceal harassment and discrimination could be made unlawful under proposals announced by government.
The government's chief people officer has told MPs that since 2015 there has been just six instances of non-disclosure agreements (NDAs) being signed with government employees.
A government minister has promised to launch a consultation into limiting the use of non-disclosure agreements (NDAs) against employees after further allegations emerged over retail billionaire Sir Philip Green.
HR and legal information and guidance relating to settlement (compromise) agreements.