He settlement refers to the document and act that means the end of an employment relationship between an employer and an employee, which is signed by them of their own free will.
The settlement Is the set of responsibilities to pay of an employer entity, for the benefit of an employee, when the employment relationship comes to an end.
If the cause of the dismissal is not the responsibility of the employee, it is common for the latter to receive some type of compensation.
Settlement
Settlement
Definition
It is the act and document that designates the end of a labor relationship.
It represents the payable responsibilities to which an employee is entitled, generally, at the end of an employment relationship.
Characteristics
It has a legal character as proof of the end of an employment relationship. It must have the signature of both parties. In your document all the obligations that the employer must pay to the employee appear. It has a liberatory character on possible claims. It is motivated by the termination of the employment relationship. It contemplates the labor benefits and benefits that must be liquidated. Its concepts are found in the document or letter of settlement. It can be accompanied by compensation, if the dismissal is unjustified.
Causes
Voluntary resignation. End of contract period. Disability or death. Dismissal with or without justification. Serious justified misconduct committed by the employee or the employer. Voluntary resignation. End of contract period. Disability or death. Dismissal with or without justification. Serious offense committed by the employer.
What is a settlement?
The settlement refers to the end of the employment relationship between an employer entity and an employee, through the presentation of a document that proves its completion.
This document represents the formality of the agreement between the parties that sign it, and contains the rights and obligations that are relevant to each case.
This establishes those benefits, labor benefits and liquidation that should be compensated, as well as the resignation to any future claim of the concepts contemplated in it.
The validation of the settlement is carried out in front of a witness, who has the legal authority for this purpose. In the settlement act it is confirmed that the parties act of their own free will. The existence of any coercion would nullify its legal validity.
Once both parties sign, the contract or labor agreement between them is terminated, extinguishing any liability, monetary or otherwise, contemplated in the settlement document.
In some countries, the money owed to an employee for work performed, at the time of termination of the employment relationship, is also called a severance pay.
Settlement characteristics
It is a two-way process. The settlement document is legal proof of the termination of the employment relationship. The signature of the same is voluntary. Contains the obligations to be settled by the employer. It can be signed for conformity or non-conformity. It is liberatory in nature: it implies the waiver of subsequent claims, regarding the obligations contemplated in the settlement document. Both interested parties must appear personally or through legal representation. According to the legislation, the employee has the right to the presence of a witness: notary, auditor, inspector, etc.
Causes of settlement
Voluntary resignation. End of contract period. Dismissal with or without justification. Disability or death. Serious justified misconduct committed by the employee or the employer.
Settlement and employer responsibilities
The settlement document contains the employer’s responsibilities (liquidation and compensation) and confirms that these have been settled. In this, the provisions of resignation to any claim by the employee are dictated, as well as their agreement on the benefits received.
However, it is also possible that there is no type of employer economic responsibility. Which means that a settlement does not always mean that a liquidation takes place.
Witnesses in a settlement
It can be a notary, an auditor, inspector, lawyer, union representative or another person with legal authority for such a situation.
At the time the parties appear, the witness has the task of attesting that both parties (or their legal representatives) are present, that they act of their own free will, accepting the conditions found in the settlement.
In addition, it can be requested by the employee, helping him to clarify any doubts about the content of the settlement. In any case, in some countries the absence of a witness does not detract from the legal validity of the settlement.
Effects of the settlement
The settlement has character liberatory. Once signed, it is proof that the employer is free of responsibilities towards the employee. Therefore, the document must present everything without ambiguity, and the voluntary agreement of the parties must be explicit.
When the settlement is signed, this is proof that the employment relationship has been extinct.
The employee can also sign with the expression “non-compliant”, making explicit their disagreement with the terms of the settlement. This can happen if he is not sure of the concepts contained in the settlement, or because he wants to make a later claim.
In any case, if you consider that your rights have been violated, you could claim by the legal means that are in force in your country.
Concepts contained in a settlement
Employer’s debts with the employee: Owed wages, unearned vacations, severance pay, unpaid incentives, unsettled overtime, etc.
deductions: anticipated salaries, anticipated vacations, lack of notice, and any other effect that is owed by the employee.
What is a liquidation?
The liquidation refers to the payable responsibilities that an employer must assume, for the benefit of an employee, when the employment relationship comes to an end, due to resignation, dismissal or death, among others.
In addition, it is possible that the employee receives compensation together with his settlement, provided that he has not incurred in a serious fault that was the reason for the end of the employment relationship.
The employer’s obligations to the employee may continue to be owed even after the termination of the employment relationship.
Settlement Features
This seeks to settle outstanding accounts that an employer has with an employee. It is motivated by the termination of an employment relationship, as well as it can also refer to the usual payment of benefits (monthly payment, biweekly, etc.), during the time of contracting. Usually, all its concepts are contained in the settlement. It can be accompanied by compensation, in the event that the end of the employment relationship is not caused by the employee. In some legislations, it is known as “settlement” only to the liquidation, when there is also compensation. There may be deductions in the amount to be paid to the employee, due to advance payments.
Liquidation and compensation
The settlement may be accompanied by a compensation. This occurs when the employee resigns for just cause, due to a serious misconduct by the employer, it is an unfair dismissal or the company ceases to exist, among other reasons.
In other words, the employee must be compensated when he or she was not responsible for the termination of the employment relationship or due to negligence.
Liquidation and settlement
Depending on the country or region, the liquidation is known in different ways. For example, in Mexico it is called “settlement” to employer obligations, which imply the payment of labor obligations.
The cause of this settlement may be due to a voluntary resignation, resignation due to serious misconduct, justified or unjustified dismissal, death or disability. The items to be paid in this case are salaries, bonuses, bonuses and unearned vacations.
Elements that influence the settlement calculation
Various factors influence the amount of money that will be paid to an employee. It is also important to consider the reason that led to the end of the employment relationship.
The legislation of each country may contemplate more or less obligations to pay and different situations in which they are applied or not. For this reason, it is important to find out about the specific responsibilities in each case.
Concepts that are contemplated in the liquidation
Seniority (years worked). Wages owed (monthly). Unearned vacations. Unearned social benefits. Seniority and other premiums. Compensation, when the employee is not responsible for the reason for the end of the employment relationship.
Causes of a liquidation
Voluntary resignation. End of contract period. Disability or death. Dismissal with or without justification. Serious offense committed by the employer.