As an employer or employee, if you are considering legally ending your working relationship, you have two options: a settlement agreement or a deed. Both these legal documents are commonly used in employment law, but it is essential to understand the difference between them before making a decision.
What is a settlement agreement?
A settlement agreement is a legally binding document between an employer and an employee that details the terms and conditions of ending the employment relationship. Typically, the agreement will include compensation payments, references, and any other negotiated terms.
One of the main advantages of a settlement agreement is that it can be used to resolve a variety of disputes, such as redundancy, discrimination, or unfair dismissal claims. As part of the agreement, the employee will waive their right to make any further claims against the employer.
What is a deed?
A deed is a legal document that provides a formal, written record of an agreement or transaction. In employment law, a deed can be used to provide additional security and certainty to a settlement agreement by making it a more formal and legally binding document.
Unlike a settlement agreement, a deed does not require consideration, which means that it can be used to provide for a promise or obligation that has no value or benefit in return.
Deeds are commonly used in employment law to protect company confidential information, such as trade secrets and customer databases. They can also be used to restrict an employee from working for a competitor or soliciting clients for a specific period after the termination of their employment.
Difference between a settlement agreement and a deed
The primary difference between a settlement agreement and a deed is their legal status. A settlement agreement is a contract between two parties, and it requires both sides to fulfill their obligations. A breach of the agreement by either party can lead to legal action.
On the other hand, a deed is a legal instrument that is binding on the parties that sign it. It provides a more formal form of legal agreement and carries a higher level of legal enforceability.
Another difference is that a settlement agreement requires consideration, which means that one party must offer something of value to the other party to create a binding contract. In contrast, a deed is enforceable without consideration. Therefore, it can be used to provide additional security and certainty to a settlement agreement.
Conclusion
In conclusion, both a settlement agreement and a deed can be used effectively to end an employment relationship. However, it is essential to understand the differences between them and consider which is the most appropriate for your situation. By understanding the advantages and disadvantages of each, you can make an informed decision that best protects your interests.