A Brief Guide to What a Settlement Agreement Entails

Workplace problems occur at different agencies and firms every day, even if it’s at the slightest degree. On the other side of the spectrum, though, some issues can escalate and turn into a full-blown dismissal. These unexpected occurrences can be pretty challenging to deal with, especially for employees who heavily rely on their livelihood with a certain company.

The dismissal can often spark workers to file a lawsuit against the employer in court. With an experienced lawyer and enough evidence, lodging a claim can help get you entitlements and compensation for the dismissal. Employers, in response, often issue a settlement agreement. 

It’s best to consult with an attorney to know your rights during the legal process. Here are the basics about what a settlement agreement entails for an employee:

Settlement Agreement Purpose

Settlement agreements can be likened to a peace offering. Employers would usually give this legal contract when claims are about to move forward in court. These documents’ purpose is to help absolve any dispute between the employer and employee by promising a sum of money instead. 

In exchange for that payment, the claim should be withdrawn by the worker who was dismissed. However, settlement agreements aren’t just drawn for dismissal claims. There are also several other issues that can encompass a claim and spark the need for settlement.

The employer often draws up the terms and conditions of the settlement, so an employee is left with the choice of accepting or rejecting the agreement. Get a legal attorney who will be able to review the whole contract for you and provide you with advice when moving forward.

Settlement Agreement Inclusions

Settlement agreements may have different inclusions. It would often state when an employee will be leaving and what type of payment will be offered to them. There are some arrangements that will have an employee earn normal wages and a bonus on top of it until their final date of termination.

Aside from the outstanding balance of one’s salary, a termination payment is also explicitly stated in the settlement agreement. These elements may be rewritten or considered void if a lawyer will overturn them for you.

Settlement Agreement Impact On Claims

Settlement agreements were mentioned above as an arrangement for employees to stop lodging in claims. A majority are successful in keeping claims at bay, but workers should note there are a few claims they can make that are ultimately immune to a settlement agreement. An attorney should be able to help you assess whether your claim won’t be affected.

A few examples of the claims that can be affected by a settlement agreement are:

  • Gender discrimination
  • Racial discrimination
  • Age discrimination
  • Unjust working hours
  • Inadequate resting hours
  • Different hours with other workers
  • Unbalanced compensation with other workers
  • Breach of contract
  • Unfair deduction from salary
  • Unfair terms with flexible working 
  • Unfair terms with part-time working


Reading through this brief overview should be able to give you a better understanding of what a settlement agreement holds in store for you. It’s advised to delve into these matters only when you have a legal expert as much as possible.

Looking for unlawful termination lawyers to handle your case? Workclaims Australia has registered industrial agents with thorough knowledge of the Fair Work Act, equipped to deal with different workplace relations issues. Get in touch with us today!

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