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A settlement agreement is a legally binding document created between an employer and employee to resolve disputes before escalating to an employment tribunal. It serves to avoid costly litigation, providing employees with upfront payment assurance while mitigating the risk of future claims against employers. Both parties benefit, as employers gain peace of mind against potential claims from former employees. Typically, these agreements cover clauses on payment amounts, terms, claims resolution, taxation, and confidentiality, ensuring clear expectations and protections for both sides.
