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Learn more about Settlement Agreement in Philippines

Any legal connection, whether between an employer and an employee or a landlord and a tenant, is likely to result in a conflict. To prevent lengthy and expensive legal actions, it may be prudent to establish a Settlement Agreement to resolve differences out of court. During talks, the parties may agree on certain matters yet disagree on others. When an agreement is made, a Settlement Agreement may be signed, but it must be balanced! And who better to obtain this agreement than a Settlement Agreement produced by a lawyer or to benefit from the aid of a lawyer in negotiating the parameters of the Settlement Agreement? Get a Settlement Agreement model and the support of an Indian lawyer who specializes in litigation and negotiation when you work with Themis Partner.

Table of contents


What is a Settlement Agreement?

When it becomes impossible to resolve a dispute through talking, mediation, or formal procedures, there is another tool available when the parties reach agreement to the end of an employment relation: a Settlement Agreement.

The settlement agreement, sometimes known as a “compromise agreement,” is used to lay out the details of an agreement to resolve an employment dispute. In most cases, an employer proposes to engage into a contract.

A Settlement Agreement is a legally enforceable contract that is often entered into between an employer and an employee. Under exchange for financial compensation, the employee frequently waives the right to file a financial claim against the employer in this contract.

Why use a Settlement Agreement?

Compromise agreements serve several functions. The settlement agreement is used to resolve disagreements at any time in the partnership, not only at the end of an employment term.

A Settlement Agreement can also be used to resolve an ongoing employment dispute, such as one over holiday pay or housing allowance. These agreements are typically presented by the employer; however they can be proposed by either the employer or the employee.

When all other methods of resolving disputes or differences in employment or in relation to any agreement and its clauses have failed, settlement agreements offer a quick resolution and are generally less time-consuming and stressful than a tribunal. However, settlement agreements are costly since they include the expense of cash compensation. They also have the ability to wreak havoc on broader employment relations if employed incorrectly.

What is included in a Compromise Agreement?

A Settlement Agreement must be in writing and have the following provisions in order to be valid:

➤ An offer is something that one side pledges to perform
➤ Acceptance of the other party's terms of that offer
➤ Valid consideration on both parties, which can be any physical or intangible advantage as long as it is reasonable and supplied freely
➤ Mutual assent, which implies that both parties agree without being forced to
➤ A legitimate goal

Check your state laws to ensure that the conditions of your contract are legal. You may need to speak with an attorney.

How to write a Settlement Agreement?

To begin, give the document a title that accurately represents the settlement. Next, compose a paragraph that names and describes all of the parties engaged in the litigation. This should contain their addresses as well as a statement that they have the power and competence to sign the agreement.

The next section should include a factual statement of the dispute that both parties have agreed on. This should be thorough and include all pertinent information.

Take note of what one party will gain in exchange for agreeing to release the other party from legal obligation (consideration). The contract is void if reasonable consideration is not provided. Consideration can take the form of a commitment, repair, replacement, or money, but it cannot include unlawful or fraudulent activity.

The agreement should also specify the types of claims that are covered. This might include all future and present claims, or it could be confined to a single claim.

Be specific about the terms of the settlement, especially if it is a conditional agreement and the action in issue needs time. Indicate whether one side is to blame or takes responsibility for the conflict. Take note of whether the settlement agreement is secret, which implies that neither party is permitted to reveal its provisions. If there is active litigation, the agreement must include a clause expressly dismissing the pending case.

Each party’s signature and the date should be included in the Settlement Agreement. When both parties have reached an agreement on a draught settlement, you can present it to the court for approval.

What to do if one party refuses to sign?

Refusing to sign may result in your job being terminated, and you will not get your employer’s payment (if any) to your legal bills. If the Settlement Agreement is rejected, threatening to terminate your job before any sort of disciplinary action has commenced constitutes inappropriate behaviour and will be disclosed to an Employment Tribunal. You will almost certainly want to file a complaint against this sort of behaviour, which, if not supported, may end in you resigning and claiming constructive unfair dismissal.

However, you should be aware that there is a time restriction for filing your claim. This is often three months, minus one day.

Why is it important to have a lawyer?

A qualified lawyer is considered an independent adviser. Themis Partner offers you with legal counsel to assist you during the procedure.

Furthermore, the Compromise Agreement must include the advisor’s name, and the adviser must have insurance in place to cover the risk of an employee lawsuit if the advice they provide is incorrect.

However, a solicitor can advise you on more than just the effect of the Settlement Agreement; they can also advise you on what the terms mean, any aspects you might want to change, and any terms and conditions that should be included outside of the legal requirements.

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