Settlement agreements can be a very effective way of managing exits from the business, whilst also managing the risks involved. By offering a settlement agreement to an employee you are effectively buying off the risk of a claim. A settlement agreement can also a useful way to bind exiting employees to additional provisions on confidentiality and post termination restrictions, where necessary.
Employers need to be very careful when discussing potential settlement with employees, as a poorly managed conversation can in itself trigger claims. For further information on how to conduct these conversations, please see:
M9: Guidance on holding protected conversations
M9 – Guidance on holding protected conversations
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