How To Compose a Professional Settlement Agreement

Standardized Legal Documents How To Compose a Professional Settlement Agreement

All You Wanted To Know About a Settlement Agreement

The settlement agreement is one of the crucial legal documents for employees. You can find numerous settlement agreement samples on the internet, but they are usually incomplete, and none of them can fully explain the purpose and importance of this contract. 

If you want to find out more about it and make an informed decision whether to accept it or not, we have your back. We will teach you how to write a great contract or compose other legal documents with DoNotPay’s handy contract templates!

What Is a Settlement Agreement?

A settlement agreement is a contract between an employer and employee stipulating the terms both parties should honor once the employment comes to an end. 

It’s usually offered by the employer who wants to prevent the ex-employee from filing a claim against them. By signing this document, they agree to pay a specific amount to the worker to end the collaboration without further conflict. 

When Should a Settlement Agreement Be Offered?

Several situations call for a settlement agreement. Here are some of them:

  1. You have gone through discrimination at work, and you want to sue your employer. They insist they are not guilty but want to avoid a lawsuit to protect their reputation
  2. Your employer has valid proof that you didn’t do your job properly and wants to terminate the employment contract with you amicably. In this case, they can offer you money or a reference you can use to get a new job
  3. You want to file a claim against your employer because they dismissed you for no valid reason, but they are ready to pay to avoid court proceedings or employment tribunal
  4. The employer wants to provide you with so-called ex gratia payment—the money you aren’t contractually entitled to—because you are terminally ill

What Details Should a Settlement Agreement Include?

Your settlement agreement should include the following information:

  1. The employee’s outstanding salary balance
  2. The employee’s outstanding balance of all bonuses and holiday pay
  3. The termination amount you agreed upon with the other party
  4. Confidentiality or Non-disclosure clause—it’s optional but recommended
  5. Non-derogatory clause—it’s an optional clause that prevents both parties from making bad comments about each other 
  6. Your statement saying that you won’t bring any claims against the employer
  7. Optional good reference
  8. Employer’s participation in paying legal fees
  9. Signatures of both parties and a solicitor or any other relevant official

Is the Simple Settlement Agreement Legally Effective?

Composing a settlement agreement and signing it isn’t enough to make it legally binding. If you want it to become effective, you must:

  • Use the acceptable settlement agreement format, i.e., it must be in writing
  • Refer to a particular procedure or complaint
  • State that all the terms and conditions align with the local legislation 
  • Get independent legal advice from a solicitor about it and state them in your agreement. Such legal services can cost up to $500, which is usually too expensive for most people. In some cases, if they want to resolve the matter as soon as possible, the employer may accept to pay your fees 

Create Legal Documents With DoNotPay

If you have ever tried composing a legal document on your own, you know what a challenging and complicated job it may be. 

Free online samples and templates may seem useful, but they rarely contain all the necessary clauses and don’t come from verified sources. You can always turn to legal services, but the amount you should set aside for a single document draft can be enormous.

DoNotPay, an awarded robot lawyer, has created a feature that will save your day! You don’t need to write your contracts manually. We made a massive collection of standardized legal documents you can customize and change according to your needs.

Here’s how to use our service:

  1. Sign in to DoNotPay in your preferred web browser
  2. Search for the desired document
  3. Provide more details about the contract or document you want to generate

Our app will automatically create a personalized version of the desired document. To make it legally binding, make sure to sign it along with the other party or get it notarized. 

If you want to learn the essentials of other popular legal contracts, check out DoNotPay’s knowledge base and read more about:

What Types of Documents Can I Generate With DoNotPay?

Our database contains the most popular legal documents. You can see all the templates we offer in the following table:

Real Estate DocumentsBusiness DocumentsMiscellaneous Documents

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