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Table of Contents
Preferably, disputes get resolved through talking, mediation or formal procedures but there comes a situation when it becomes impossible to resolve the dispute, there’s another tool when the parties mutually agree to the end of an employment relationship: a settlement agreement.
The Settlement agreement also is known as ‘compromise agreements, It is used to set out the terms for agreeing to settle an employment dispute. Generally, it is an employer who proposes to enter into a agreement.
A settlement agreement is a legally binding contract, usually between an employer and employee. In this contract, the employee often waives the right to bring a financial claim against the employer in return for financial payment.
Settlement agreements are for multipurpose. The settlement agreement is not just used to end an employment relationship; in fact, they used to settle the disputes, mid-contract too, at any point in the relationship.
A settlement agreement can also be used to fix an ongoing workplace dispute, for example, a dispute over holiday pay, Accommodation allowance. Generally, the employer proposes for these agreements but it can be proposed by either an employer or an employee too.
When all the ways have failed to settle the disputes or differences arises in the employment or in respect to any agreement and clauses therein; settlement agreements offer a swift resolution and are generally less time-consuming and stressful than a tribunal. However, settlements agreement are expensive as they do carry the cost of financial compensation. They also have the potential to damage wider employment relations if used inappropriately.
Background of the Party
In the recital part of the agreement the relation of the party must be release; like
The employee accepts that this agreement is binding on both parties and this is the final settlement.
In consideration of the duties performed, the employer shall is entitled to the profits on the basis of his performance. Profit will be ascertained by the management of the company on the basis of work or task handled by the employer.
This Agreement shall be governed by and construed in accordance with the laws of India, without giving effect to any choice of law or conflict of law provisions. The Parties consent to the jurisdiction in the courts of Uttar Pradesh.
[The Employee settles that [he/she] will remain to be bound by the terms and conditions of employment which relate to confidentiality and restrictive covenants.
[The Employer and Employee agree that they will keep the existence and terms of this Agreement confidential (with the exception of disclosure to immediate family or relevant professional advisers, provided that those persons agree to keep the information confidential, or where disclosure is required by law).]
[The Contracts (Rights of Third Parties) shall not apply to this Agreement and only the Employer and Employee shall have rights under it.]*
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