How to Write an Agreement Letter After Wrongful Termination
Wrongful termination is a serious matter that has been the subject of many lawsuits. Nevertheless, since litigation is expensive and time-consuming, most people choose to settle such claims out of court. There are several important factors to keep in mind when writing a settlement agreement for wrongful termination, including calculation of payment, release of further liability and taxes. The assistance of an attorney is helpful but not absolutely necessary---if you are a small-business owner or an aggrieved employee, you might want to consider drafting it yourself.
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Things You'll Need
- Printer
- Sample settlement agreement
- Employee personnel records
- Employer payroll records
Instructions
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1
Identify the employer and the employee by their legal names and addresses in the preamble to the agreement. In the case of the employer, the employer identification number should be included, and in the case of the employee, the social security number should be used.
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2
The first section should include a statement that the employer acknowledges no wrongdoing and is entering the agreement in order to avoid the expenses and inconvenience of litigation.
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Calculate the payment to the employee. Payment factors should include pay and benefits for time lost from work, along with a reasonable time for the employee to find an equivalent position as a result of the dismissal; emotional suffering; damages to the employee's professional reputation; and any legal fees. Because it is an out-of-court settlement, the total should be discounted by 25 to 50 percent in order to provide the employer with a sufficient incentive to settle instead of going to court.
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4
List the amount of the payment to the employee. This section should also clarify whether the amount shown is gross or net of federal, state ands local payroll taxes. If taxes are deducted, these should be itemized.
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The employee should specifically release the company and its shareholders, employees, officers and directors from all past, present and future claims of the employee with respect to the subject matter of the agreement (the wrongful termination). It is best to use a professionally drafted clause for this purpose.
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A confidentiality clause should be included that bars the employee from disclosing the contents of the settlement agreement to third parties (except perhaps the employee's immediate family). This is to prevent the employee from damaging the employer's reputation by speaking with the media, and to discourage "copycat" claimants in case the amount of the settlement was large.
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The settlement agreement should be signed and notarized by both the employee and a legal representative of the employer.
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Tips & Warnings
Since signing a settlement agreement containing a release of liability will bar the employee from seeking any further payments from the employer as a result of the wrongful termination, the employee should take care to carefully calculate and document all damages of any kind whatsoever, whether easily quantifiable or not, and include them in the final settlement amount.
Defending a wrongful-termination lawsuit can damage a company's public image even if the employer eventually prevails. On the other hand, early settlement might encourage further, frivolous lawsuits. Employers should try to find the middle ground between standing on principle and appeasement.
