A settlement agreement is designed to provide a final resolution between two parties. It is a legally binding contract designed to terminate the employment relationship and allow an employee and employer to move on with no come backs. It should be taken seriously by everyone involved and generally this is the case. The terms are observed by both parties. Occasionally this doesn’t happen so what should you do if the employer doesn’t pay. Let’s take a look at what steps should be taken in that situation.
Gather Evidence
The first step in any potential dispute matter is to gather the evidence. In a lot of instances of disputes this can be a really difficult problem. Restrictive covenant issues are notorious for difficulties with evidence gathering. In the case of Settlement Agreements this is generally really straightforward. You should get together any emails, notes of meetings, memos, or documents that are related to the settlement agreement and, of course, the key document, the Settlement Agreement itself. It is important to note that all evidence must be relevant and accurate.
Notify the Other Party
Once you have got together all relevant evidence, it is important to notify the employer of the breach of contract and that acclaim is going to be made. This should be done in writing letter or email is fine depending upon how quickly you need a response. Nothing stops you telephoning the employer but just make sure there is something in writing so that there is a record just in case you need it. It is important to remain professional and persistent during this process even if you are angry about the default.
Negotiate a Resolution
After the employer has been notified of the breach of the terms of the settlement agreement you need to consider the response. If it is not an apology and immediate payment you should at least consider whether or not to negotiate a resolution. This may involve renegotiating certain aspects of the agreement or coming up with a revised payment schedule. The reason for non-payment is more than likely to be due to shortage of money temporary or permanent. You need to be pragmatic and open-minded during this process to see if you can reach an amicable solution despite not receiving what you should have received in the first place.
Mediation & Arbitration
In some instances there is a genuine dispute. The employer claims that the employee has breached the Settlement Agreement, usually a breach of confidentiality or sometimes a breach of the non-derogatory comments clause and the employer retaliates by not making payment. If negotiations fail the law’s position is that you should not just kick off proceedings. You need to go through the formal process of serving a Letter before Claim and, as part of this, you need to offer some kind of dispute resolution outside of the Court system. This might be mediation or arbitration by an independent arbitrator. Mediation is likely to be the most suitable and involves both parties working with an impartial third-party mediator who assists them to reach an amicable resolution without going through court proceedings. Arbitration involves both parties presenting their case before an arbitrator, who then renders a binding decision on how best to resolve their dispute. Frankly my view is that if negotiation does not work and mediation does not work or is not suitable an employee should look to take the matter to Court.
It is right that parties should not rush to a Court but in my experience there are very few genuine disputes raised by an employer about breaches of a Settlement Agreement by an employee and the sooner that an employee puts on real pressure the better.
If you feel that a settlement agreement has been breached, you may want to enlist the help of a specialist settlement agreement solicitor to get some advice or representation. Settlement Agreements of Swindon are specialists in this field and would be happy to hear from you.
We are based in Swindon and offer settlement agreement advice to clients across the South West including Bristol, Bath, Oxford and Reading.