Have you ever been given a document so fat that it makes your college syllabus a meme? Yep, that is your employee settlement contract. It is full of legal jargon that might sound nice but would considerably impact your cheque in hand and benefit packages, and possibly what you are even able to say after departure.
Stop when you haven’t signed, take a deep breath, and take a closer look. That confidentiality agreement or waiver of claims can get you more than you bargained for.
In this cheat sheet, we are translating the most incomprehensible legal words into simple English so you understand what you are signing up for. You might be quitting your job when it is going well with you, or you might simply have reached your dead-end level of frustration, but this might just help you avoid a colossal regret at the end.
Why Legal Jargon in Employee Settlement Agreements Matters
It is not only lawyers who need to understand the legal jargon in the employee settlement agreements, but employees do too. They might seem dull, but these words can mold one’s future. Here is why it counts:
It Impacts Your Final Paycheck
Some words have a direct implication on the amount of money you get to take home. Oversight of one problematic provision and you may forfeit hundreds or even thousands of dollars or other benefits to which you are entitled.
You Might Be Signing Away Rights
That waiver of claims is not just fancy terminology, it might be that you are foregoing the right to sue somebody, even when some shenanigans happened.
Restrictions Could Follow You
Non-compete and non-disparagement clauses are not only legal mumbo jumbo, but may restrict where you can work in the future and even what you may say publicly about your former employer.
It Can Affect Your Taxes
Part of the payments might appear to be complimentary, but they might be taxable. Learning this early will save you a painful surprise when the time to pay the tax comes.
You Can Negotiate
Yep, those are not necessarily written in stone. When you know what they mean, you will understand what to resist about it and where you can score.
Common Legal Terms Explained
Without Prejudice
The phrase translates to the offer or dialogue cannot be used as evidence in court, thus, the two parties may freely negotiate without fearing any legal repercussions.
Ex Gratia Payment
An ex gratia payment is money paid voluntarily by the employer without admitting legal obligation, therefore, it cannot be considered as money that the employer should have paid.
Waiver of Claims
By signing this, you are waiving your right to sue your employer on any aspect of what has occurred during the employment period, including things you have not even found out about yet.
Confidentiality Clause
This condition also means that you are legally forced to stay silent on matters in the agreement or events in the workplace, even after you have left. Putting too much out there may sue you. Recent UK law now limits such NDAs.
Non-Disparagement
This prevents you from saying bad things about your employer after your departure. That entails social shares, outright reviews, or even informal remarks that may do them a lot of harm.
Restrictive Covenants
These restrict what you can do after leaving employment, such as working for rivals, opening a similar operation, or trying to poach colleagues, for a certain period and within a specific boundary.
Payment instead of Notice (PILON)
Rather than serving out your notice period, your employer compensates you to go right away. It sounds pleasant, but it may impact benefits and your actual last date.
Consideration
This is what you will be paid to sign the deal, which is usually monetary. In the absence of this exchange, the whole agreement does not become legally enforceable in terms of contract law.
Questions to Ask Before Signing
Am I able to negotiate the Terms?
When you write it in a legal font, it does not become final. A great number of terms, particularly payment or restrictions, can be negotiated when you know what to request.
Exactly What Do I Sacrifice?
Study all the waivers. You may be waiving a right to bring a case based on discrimination or unpaid wages, or other types of claims that you have not even thought of bringing.
Are There Any Tax Implications?
Tax may be required on some payments and not on others. Rather than ending up owing the IRS more than you planned, you can get the answers to your questions now.
Will It Affect My Future Employment?
Restrictive covenants, along with non-competes, may restrict where you will work next. Ensure that you are not selling out years of your career, you will never have twenty-four hours later.
Does a Lawyer Need to be Involved First?
Spoiler: Yes. An attorney can raise red flags, interpret small print, and make sure you are not on the receiving end of the legal short end of the stick.
Conclusion
You do not want to sign something without knowing the meaning of every word in it. Learning about your settlement agreement is not only clever, but it is also how you safeguard your rights, your salary, and your sanity.
