Sign a settlement agreement online

What a settlement agreement does

A settlement agreement resolves a dispute, or a possible one, in exchange for a payment or other terms. It is used to end employment on agreed terms, to settle a commercial claim before or during litigation, and to resolve disputes with suppliers, customers or landlords.

Its core is the release: one party gives up the right to bring claims in exchange for what the other provides. Everything else supports that exchange.

UK employment settlements: the adviser's certificate

In the UK, employees cannot normally contract out of statutory employment rights. A settlement agreement is the exception, and section 203(3) of the Employment Rights Act 1996 sets conditions: the agreement must be in writing, relate to particular claims, and the employee must have received advice from a relevant independent adviser, usually a solicitor, who is named and insured. The adviser signs a certificate confirming the advice.

Without the advice and certificate, the employee's waiver of statutory claims is not binding. Employers usually pay a contribution to the employee's legal fees for this reason.

US settlements and older workers

In the US, the Older Workers Benefit Protection Act sets conditions for releasing age discrimination claims by employees aged 40 or over. The employee must be advised in writing to consult a lawyer, be given at least 21 days to consider the agreement (45 days in a group termination programme) and have 7 days after signing to revoke it.

That revocation period affects how you send it. The agreement only takes effect after the 7 days, so payment should not be made before then. Many states have their own rules on confidentiality clauses in harassment settlements. This is general information, not legal advice.

Clauses that matter

The release and the tax treatment generate most of the negotiation.

• Settlement sum, tax treatment and payment date.
• Scope of the release: which claims, known and unknown.
• Carve-outs that cannot be waived, such as accrued pension rights or claims for personal injury not yet known.
• Confidentiality, with lawful exceptions for reporting to regulators or police.
• Agreed reference and announcement wording.
• Non-disparagement, and whether it binds the employer's senior people.
• Return of company property.
• No admission of liability.

Signing order

A common order is: employee, then their independent adviser signs the certificate, then the employer signs last. That way the employer only commits once the agreement is binding on the employee. In Sign PDF, set 'one after another' and add the adviser as a signer between the two parties.

In litigated commercial disputes, settlements are sometimes recorded in a court order, such as a Tomlin order in England, which the lawyers handle with the court.

Sending a settlement with Sign PDF

Upload the agreement. Sign PDF places signature blocks for 'Employee' and 'Employer', and finds the adviser's certificate block if it is labelled. Ask the assistant to 'add employee initials beside clauses 4 and 9' to mark the release and confidentiality terms.

Each signer confirms a code from their email and signs. The certificate of completion records the time of each signature, which is useful for calculating the US 7-day revocation period. Confidential settlements are visible only to you and the signers.