Settlement agreement and final discharge

A settlement agreement is a mutual decision to terminate an employment contract. A crucial component of this agreement is the final discharge. This discharge clause can have far-reaching implications, making it essential to formulate it accurately. If not done properly, the interpretation of the agreed clause can lead to unintended consequences.

What is final discharge?

Final discharge means that all issues discussed are considered definitive. Parties agree that after executing the relevant agreement, they will not have any further claims against each other. This clause can have significant consequences, especially if certain topics or claims are overlooked during the negotiation of the settlement agreement.

The consequences

A final discharge can prevent a specific claim from being filed after the settlement agreement is signed. For example, in a case where an employee’s position was eliminated due to a reorganization, she requested payment for an irregularity allowance during negotiations. However, this was not included in the final settlement agreement, and she signed it with a final discharge. Later, she attempted to claim the irregularity allowance through the courts, but the judge ruled against her. The court determined that the final discharge also covered financial consequences, including unpaid wages. This highlights the importance of careful consideration when drafting a final discharge clause.

Conclusion

When drafting a settlement agreement, it is crucial to be clear about what is and what is not included in the final discharge clause. Ensure careful and precise wording to avoid misunderstandings. Seek proper legal advice before signing a settlement agreement.

More information

If you have questions about the final discharge clause or your settlement agreement, please feel free to contact us.