Termination of employment: settlement negotiations must be 'subject to contract'

By Charlotte Staples

A recent case has highlighted the pitfalls of failing to make any settlement offer ‘subject to contract’.

The recent case of Newbury v Sun Microsystems demonstrates the importance of making any settlement offer not just ‘without prejudice’ but also ‘subject to contract’. In this case, the parties found themselves bound by two without prejudice letters in which a settlement was offered and accepted. The High Court found that these letters amounted to a contract in themselves and no further settlement agreement was required to make the settlement binding on the parties.

When entering into discussions with an employee about resolving a potential or actual claim and/or terminating their employment make sure that…

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