Settlement agreements are fairly commonplace within the employment field; they’re a legally binding arrangement that waives an individual’s right to make a claim covered under the terms of the agreement to an Employment Tribunal or Court. But what can an employer do if an employee breaches the terms set out by their approved settlement agreement?
The majority of settlement agreements include some formal payment to the employee, often described as a ‘compensation sum’, ‘termination payment’ or ‘ex-gratia payment’. Even where there is no substantive dispute between the employer and employee, if the employer is paying the employee a sum in excess of what they are legally entitled to, an employer will often request that the employee enters into a settlement agreement.
The settlement agreement will cover such matters as the termination payment, the return of company property and information, obligations of confidentiality, waiver of claims, restrictions on future actives and various indemnities and warranties.
Once the settlement agreement has been entered into, the same is legally binding. Where one party has breached the settlement agreement, the other party may:
Depending upon when the settlement agreement was entered into will determine whether the claim can be brought in the Employment Tribunal or the County Court.
Let us imagine a scenario where an employee has made a damaging or derogatory comment about the company, clearly in breach of the terms of their settlement agreement.
Firstly, it is important that evidence of this breach is gathered. If a comment has been made on the internet, for example, then a screenshot or a printout of the comment would be useful.
If the ‘termination payment’ has yet to be paid, then consideration would need to be had to the wording of the settlement agreement itself. Is the ‘termination payment’ conditional on the employee not making such damaging or derogatory comments? If it is conditional, then further advice should be sought. As a general rule, settlement agreements do not generally make payment of settlement monies a condition of the whole agreement or a condition of the employee waiving certain claims against the employer. The settlement agreement would continue to be binding on both parties and the employee’s remedy for non-payment would be a breach of contract against the employer.
If the ‘termination payment’ has been already paid, the employer may seek damages by bringing a breach of contract claim.
An employer may look to seek an injunction against the employee; however, the cost involved in seeking such an Injunction may well be disproportionate to the issues in dispute.
In the scenario above, an employer would be best advised to first seek for the offending comment to be removed. If the employer has suffered no loss as a result and the employee has removed the offending post, the employer may decide to take no further action. If, however, the employee fails to remove the post, then further advice would be required and/or if loss has been suffered.
Most disputes with regards to a breach of the terms of a settlement agreement can be dealt with swiftly and without the need to incur substantial legal costs or the issuing of legal proceedings.
If you believe that an employee has breached the terms of a settlement agreement, or require further legal advice on how to ensure that breaches do not occur in the future, Pinney Talfourd solicitors in Essex and London are here to advise and assist. We have an experienced and dedicated team of employment lawyers based in five offices across the county.
We offer late night and Saturday appointments, and our free initial telephone consultation allows you to explain the situation with an expert lawyer and discuss the best steps to minimise stress and delays. You can book your free initial employment consultation using our online booking form or by calling your local office.
The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. The law may have changed since this article was published. Readers should not act on the basis of the information included and should take appropriate professional advice upon their own particular circumstances.