How a settlement agreement is breached
A settlement agreement can be breached in a number of ways, depending on the obligations set out within the document; these agreements often contain detailed provisions that both parties must adhere to after signing.
Example of a breach
For example, an employer might fail to pay the agreed settlement sum within the specified timeframe.
Equally, an employee may breach the agreement by failing to comply with restrictive covenants, such as setting up a competing business, soliciting former clients, or disclosing confidential information.
Because these agreements are tailored to each case, even minor deviations from the terms agreed can constitute a breach.
What can the innocent party do?
If a Settlement Agreement is breached, the innocent party has several legal options available.
These typically include seeking enforcement of the agreed terms and/or bringing a claim for breach of contract and seeking damages.
The appropriate course of action is subjective and will likely depend on the severity of the breach and the losses resulting from it; yet in many cases, early legal assistance can help to avoid further proceedings and litigation.
If an employer breaches the settlement agreement
If an employer breaches a Settlement Agreement, the employee may bring a breach-of-contract claim to recover any financial losses incurred.
To succeed in such a claim, the employee would generally need to demonstrate that a legally binding contract existed and that:
The employer failed to fulfil their obligations under the agreement
The employee suffered loss as a direct result of that breach
This could include unpaid settlement sums, benefits, or other agreed compensation.
If an employee breaches the settlement agreement
Where an employee breaches the terms of a Settlement Agreement, the consequences can also be significant.
Depending on the wording of the agreement, the employee may be required to repay some or all of the settlement payment received.
Not only that, but they may also be liable for the employer’s legal costs arising from the breach, this is particularly common where confidentiality or restrictive covenant clauses have been violated.
Why seek early legal advice
Settlement agreements are intended to provide clarity and finality, but when a breach occurs, the situation can quickly become much more complicated.
Understanding your legal position from the get-go is required so you can begin to understand the options available to you.
If you believe a settlement agreement has been breached, it is vital to seek legal advice promptly, as early intervention can help prevent further complications and achieve a resolution sooner rather than later.
Speak to Orwins for settlement agreement advice
At Orwins, our employment law solicitors advise both employers and employees on all aspects of settlement agreements, including settlement breaches.
We provide legal guidance tailored to your situation, ensuring you’re protected; talk to us today to find out how we can help.
