An employment settlement agreement is an agreement between an employee, also known as the claimant, and his employer, wherein they agree to settle a claim the employee has against the employer.
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The purpose of entering into an employment settlement agreement is so both parties can resolve the employee's claim without needing to endure unnecessary and expensive litigation.
The scope of an employment settlement agreement varies depending on several factors including the type and extent of the employee's claims and the structure of the payment to be made by the employer to the employee in exchange for the release of his claims. The payment structure should indicate not only the amount of compensation, but the date on which it is to be paid and how the payment will be made (e.g., cash, stock).
Most employment settlement agreements include a confidentiality clause. By signing the agreement and accepting payment in exchange for his claims, an employee agrees to keep all aspects of the agreement, including negotiations, confidential.
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