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Top 10 common questions and answers for settlement agreements for senior roles like MD,s CEO’s, Managers

Calendar April 20, 2023
  1. What is a settlement agreement? A settlement agreement, also known as a compromise agreement, is a legally binding agreement between an employer and an employee that sets out the terms and conditions of the employee’s departure from the company.
  2. When is a settlement agreement used? A settlement agreement is often used when an employer wants to terminate an employee’s employment, and the employee agrees to accept a financial settlement in exchange for waiving their right to pursue any legal claims against the employer.
  3. Who can offer a settlement agreement? A settlement agreement can only be offered by an employer, and it must be in writing. Employer normally pays towards the legal fees of getting the agreement checked.
  4. What should be included in a settlement agreement for senior roles? For senior roles such as MDs, CEOs, and managers, a settlement agreement should include the terms of the financial settlement, confidentiality clauses, non-disparagement clauses, and any other relevant terms specific to the senior role.
  5. Can an employee negotiate the terms of a settlement agreement? Yes, an employee can negotiate the terms of a settlement agreement, including the financial settlement amount, the terms of any post-employment restrictions, and any other relevant terms.
  6. Can a settlement agreement be enforced? Yes, a settlement agreement is a legally binding contract, and it can be enforced in court if either party breaches the terms of the agreement.
  7. Is it necessary to have legal advice before signing a settlement agreement? Yes, it is highly recommended that both the employer and the employee seek independent legal advice before signing a settlement agreement to ensure that they understand the terms and implications of the agreement.
  8. How long does it take to finalize a settlement agreement? The length of time it takes to finalize a settlement agreement can vary depending on the complexity of the agreement and negotiations between the parties, but it typically takes several weeks to reach a final agreement.
  9. Can a settlement agreement include a non-compete clause? Yes, a settlement agreement can include a non-compete clause, which is a restriction that prevents the employee from working for a competitor or starting a similar business for a certain period of time.
  10. Can a settlement agreement include a reference clause? Yes, a settlement agreement can include a reference clause, which outlines what reference the employer will provide for the departing employee.

Our team of experts regularly advise on Settlement Agreements and will be able to advise you.


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