Drafting The Settlement Agreement

It is therefore essential that the worker have an independent lawyer (i.e. not a lawyer who also acts on behalf of the employer!) to determine whether the worker has a potential right and what exactly he would give up by signing the agreement. The transaction contract should be executed by persons authorized to do so. This is particularly important in the Middle East, as many jurisdictions, including the United Arab Emirates, require the signatory to have explicit powers to implement transaction agreements or, at the very least, to bind the company (for example. B, Article 58.2 of the United Arab Emirates Code of Civil Procedure). The core of a settlement agreement will be that the worker will receive compensation for the end of his employment, in exchange for the abandonment of the right to take legal action in court. However, workers must be fully informed of what they are abandoning in order to make the agreement fair. An employer could offer an employee an apparently tempting offer as part of a transaction contract (for example. B $10,000), but if the worker has a waterproof duty of more than $50,000, it is absolutely not in his best interest to sign the contract. It is important to ensure that the amount of compensation shown in the document reflects the amount agreed between the parties and the currency. If a comparative amount is paid, the tax impact should be taken into account.

For example, the parties may expressly specify that the amount of compensation covers vat (VAT). This is also an important consideration for parties based in the Gulf countries, now that VAT has been introduced in the United Arab Emirates and other Gulf countries. Employers should be careful not to be overly dependent on precedents and ensure that any agreement is appropriate to the situation. However, the properly developed precedents will include a clause stating that the terms of the transaction agreements have been met. Although it is often a fairly long list of labour laws in the agreement itself, it is absolutely essential to include this paragraph, otherwise it is not legally valid and could affect both parties. However, communication is not recognized in some jurisdictions (including the United Arab Emirates). Therefore, documents identified as “non-prejudice,” such as draft transaction agreements, may be submitted to the court or the arbitral tribunal and subsequently invoked in the absence of a transaction. For this reason, it is customary in the United Arab Emirates to limit the documentation of transaction negotiations and to try to agree on a confidentiality agreement covering any exchange of information during transaction negotiations and to make it clear to each exchange that transaction offers are made in full without any responsibility. One of the most effective techniques I know and use as an intermediary is to start negotiations on the terms of the settlement agreement before the joint conciliation meeting.

Wait a second! It`s counter-intuitive! How do you negotiate an agreement before you even sit down and face the other side? They don`t even know what they want! Hidden rocks are discovered. Nothing can scratch a mediation faster than a party that shares a concept of comparison that the other party considers a non-starter or a dealbreaker. Sharing conditions in advance allows parties and mediators to identify barriers at an early stage and identify ways around them. And if the controversial term for both parties is a true “must have,” then a negotiation on all other conditions and price is a waste of time and mediation will fail.

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