What Are The Reasons Employers Offer Settlement Agreements In Australia?

July 25, 2024    Employment Lawyers
What Are The Reasons Employers Offer Settlement Agreements In Australia?

Settlement agreements were introduced in July 2013 to promote an amicable resolution to company disputes. The major aim was to sort out the differences between various departments within the company. It was considered that both parties would come to a mutual settlement without resorting to employment tribunals.

 

However, it is common for a party to agree to the settlement case and then walk away later. There are understandable reasons for such situations. For instance, the employee may feel that they have been forced to settle the case. Later on, when the situation had become unacceptable, they walked away.

 

In these situations, a few questions arise, such as why the employer would offer a settlement in the first place. Or, why should they not be used if applicable? To answer such questions, we bring you this blog. Here, we will also let you know how settlement agreement lawyers in Perth can help you. So, let’s continue reading to find out.

 

What are settlement agreements?

 

Firstly, we need to know what these are. These legally binding contracts between employees and employers are created to solve issues that crop up between them. It often compensates the staff so they do not pursue any claims in court. Apart from this, it may also include provisions like agreed references or some clauses.

 

Both parties must keep the terms and agreement confidential, such as the payment amount. The parties can negotiate these agreements or be mediated by settlement agreement solicitors. There can be multiple reasons for this settlement, which we need to know about.

 

Grounds for offering the settlement agreement

 

Before terminating a worker, the employer needs to offer a contract to bring their former relationship to an end. This document will resolve a dispute between both parties so the staff does not raise a claim in court.

 

Here are a few reasons why such a contract is signed. Employees who have a petition can seek independent legal advice from employment lawyers in Perth WA. These professionals will assist them in strengthening their claims and assess how much they can obtain if they are successful. This information can be extremely helpful in assessing if signing the settlement agreement is beneficial.

 

1. To avoid litigation

 

The first and most obvious reason is this. These settlements can help both the parties reach a mutually acceptable resolution. These documents acknowledge that the present situation is not working well and must be resolved amicably.

 

By hiring employment law lawyers, they can assist you in these cases. They will guide you through the uncertainty and cost of prolonged legal battles.

 

2. To provide certainty

 

Such an agreement can offer surety, ultimately leading to a quick conclusion. If the employer does not agree to this contract and goes to pursue tribunals, they may face uncertainty and varying results. However, many individuals may end up on the wrong side of this contract. In such cases, a settlement agreement solicitor in Perth can help you.

 

3. To reassure employers

 

These contracts assure the proprietor that the workers will not bring any claims against them. Especially if the procedure has not been followed, some organisations can even decide to procure such agreements even if the employee loses their job, especially if the procedure has not been followed.

 

They can do this even if the employer is not at fault or the staff has no grievance against them. In such cases, this document offers peace of mind that there will be no options for the staff to claim a case at any given time. If you are an employer facing such stressful situations, contact the employment law firms in your area.

 

4. To benefit employees

 

These agreements ensure that the employees are legally obligated to pay a settlement sum. This is generally tax-free and acts as an incentive. To compensate for this, the workers are given an enhanced package. This sum is worth more than the statutory minimum or the pay scale mentioned in their employment contract. This approach works as a safeguard for staff who believe the redundancy dismissal is useless. They can easily accept the money offered and leave the company.

 

Wrapping up

 

Whether you are an employer or an employee looking for such settlements, you must be familiar with the employment laws in Perth. In these cases, obtaining specialist legal advice is crucial to ensure a smooth resolution. To find out how the Employment Lawyers can help, contact them today.

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