Settlement agreements, also known as compromise agreements, are legally binding documents that end disputes between an employer and employee. They are usually used in situations where an employee is leaving their job and wants to receive a financial settlement in exchange for agreeing not to take any legal action against their employer.

If you find yourself in the position of having to sign a settlement agreement, it is important to know if the agreement is fair, reasonable and in line with your expectations. Here are some things to consider when assessing the fairness of your settlement agreement.

1. Compensation

The compensation package outlined in the settlement agreement should reflect your salary, seniority, and the circumstances leading up to the end of your employment. You should ensure that you are not being shortchanged and that the amount of compensation being offered is reasonable.

2. Legal fees

In most cases, the employer pays the legal fees associated with a settlement agreement. However, this is not always the case, and it is important to ensure that any legal fees you incur are covered by the settlement agreement.

3. Confidentiality

Most settlement agreements contain confidentiality clauses that prevent you from discussing the details of the agreement with anyone. You should ensure that the confidentiality clause is not too broad and that you are still able to discuss the agreement with close family members and advisors.

4. References

If you are leaving your job because of a dispute with your employer, it is important that the settlement agreement includes a reference that accurately reflects your time with the company. You should ensure that the reference is positive and that the terms of the reference are clearly outlined in the agreement.

5. Non-compete clauses

Non-compete clauses prevent you from working for a competitor or setting up a competing business after leaving your job. You should ensure that the non-compete clause is reasonable and does not prevent you from earning a living in your chosen field.

In conclusion, when assessing the fairness of a settlement agreement, it is important to consider all aspects of the agreement, including compensation, legal fees, confidentiality clauses, references, and non-compete clauses. If you are unsure whether your settlement agreement is fair, it is advisable to seek legal advice before signing it.