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How do you invalidate a settlement agreement?

Reasons to choose Wilson Browne

Failing to Adhere to Statutory Requirements

A settlement agreement can only be legally valid in preventing an employee from bringing a claim if it complies with several specific requirements:

  • It must be in writing
  • The agreement must relate to a specific complaint or proceedings
  • The employee must have had independent legal advice

The agreement must identify the independent adviser

  • It must state that it meets the statutory regulations covering settlement agreements.

If the settlement agreement fails to meet any of these conditions, it is not a legally binding document and therefore doesn’t stop the employee from pursuing a claim.

How Do You Invalidate a Settlement Agreement?

Misrepresentation

There are cases where employees can prove that employers misrepresented themselves in settlement agreement offers.

If, for example, the employer encourages the employee to sign the agreement by saying they will guarantee an offer from another company, but this isn’t true, then this is a misrepresentation.

To establish this, the misrepresentation must have led to the making of the contract – it wouldn’t apply if the employee would have signed anyway, for whatever reason.

Mental Capacity

If a tribunal can establish that an employee did not have mental capacity when signing the agreement, this can invalidate it.

It’s similar to situations where someone challenges the legality of a will because the person making it lacked mental capacity at the time.

Lacking mental capacity can relate to various states, such as mental illness, depression and addiction.

Economic Pressure

There may be situations where someone signs a settlement agreement because they feel pressured to do so for economic reasons. This is a less commonplace reason for invalidating an agreement and can be hard to establish. It would have to involve more than just a shortage of money.

One example would be if an employee of a financial institution also had a mortgage with the same institution and had been threatened with foreclosure.

Mistakes in the Agreement

Mistakes in legal documents can invalidate them, and this applies to settlement agreements as well.

Normally, this would need to be a fundamental mistake, not just a minor error.

Invalidating settlement agreements usually involve complex legal arguments. Just as employees should have independent legal advice when making these agreements, they need professional support and insight if they set out to challenge them.

Breaching Settlement Agreement

Employers can also potentially invalidate settlement agreements by breaching terms outlined within the agreement itself.

When both parties enter into a settlement agreement, they agree to specific terms and conditions to resolve a dispute or issue. If the employer breaches these terms, such as failing to provide the agreed-upon compensation, benefits, or other considerations to the employee, it could be interpreted as a violation of the contract.

Such breaches could provide grounds for the employee to challenge the validity of the settlement agreement, potentially leading to legal action or renegotiation. Additionally, if the breach involves a material aspect of the agreement or demonstrates bad faith on the part of the employer, it could further strengthen the employee’s position in asserting the agreement’s invalidity.

For more information about settlement agreements, please contact us.

Amy Lee

Posted:

Amy Lee

Paralegal

Amy is often the first point of contact for clients of the employment team.