Ask Partners – Common questions on settlement agreements

As experts in drafting and advising on settlement agreements, we do come across questions which are difficult to get your head around. We have created a series of ‘Ask Partners’ where we address questions on tricky issues within settlement agreements.

What is the employer's position where the employee signs the settlement agreement but fails to return the reaffirmation letter?

The purpose of a two-part settlement agreement is usually to agree terms at the outset and reach a binding agreement, but to ensure that any claims arising between the first signing and the termination date are waived before the termination payment is made. As a result, there is usually a binding agreement in place once the first part has been signed. This will depend ultimately on the wording of the settlement agreement. It is possible that the settlement agreement could be drafted in such a way that no binding agreement comes into effect until the second part is signed.

Assuming the settlement agreement is binding without the reaffirmation letter, you would need to consider the terms to establish the exact effect of the employee's failure to return the signed reaffirmation letter.

Stay tuned for more frequently asked questions on settlement agreements…