Should a settlement agreement be confidential? Employment Contracts

Settlement agreements are legal contracts made between employers and an employee. They are often used to settle disputes quickly and cost-effectively. Once a settlement agreement is reached and signed, the employee waives their right to make an employment tribunal claim on matters that are covered in the agreement.

Are settlement agreements confidential?

Most employers will want to keep the terms of a settlement agreement confidential. To ensure this happens, confidentiality clauses can be built into a settlement agreement. These clauses stipulate that an employee cannot discuss the existence of the agreement or its terms.

Confidentiality clauses are very much open for negotiation during meetings and employees are within their rights to reject the terms of an agreement on the basis of an unreasonable confidentiality clause. Employees must seek independent advice from a relevant independent adviser to understand these clauses and how it might affect them in the future.

What happens if a confidentiality clause is breached?

If any terms of a settlement agreement, including confidentiality clauses, are breached then the wronged party can claim for breach of contract. Usually, this type of breach of contract results in a claim for damages for loss.

If an enforceable repayment clause exists within the original settlement agreement, the employee who is in breach of contract will be ordered to repay all or some of the money they were paid by the employer, as well as any legal fees incurred by the wronged party.

Help and support from Beswicks Legal

If you wish to seek professional advice on settlement agreements, either as an employer or an employee, please contact us. Our employment law specialists are on hand to clarify your position and outline your options to help you make an informed decision.

For more frequently asked questions regarding settlement agreements and redundancy, take a look at our dedicated Legal Hub or get in touch with our team.