Both parties enter into the agreement in order to identify and implement the conditions under which they undertake to settle potential or actual rights that the employee has or may have in connection with his or her employment. Such an agreement is most often concluded when the employment relationship has ended or is about to be concluded, although the employment relationship may continue. A settlement agreement, like any other contract, is useful to a party who intends to enforce it, unless it is valid. The transaction agreement contains the essential elements of a contract and contains several other requirements to be valid, given that the transaction contract is a particular type of contract. PandaTip: If there are other obligations of the parties, you must include them in section 4 above. Instead of going through the legal process, employers and employees sometimes choose to enter into a settlement agreement. A settlement agreement is a legally binding agreement between the employer and the worker. The settlement agreement was formerly known as a compromise agreement under labour law. In the settlement agreement, a worker agrees not to pursue certain legal claims of the Labor Court against a defendant or potential defendant of a claim. It is used when the employee leaves the organization and the employees` payment, including all claims, is settled. The parties must meet certain conditions for a settlement agreement to be properly concluded. After the signing of the contract by the parties, the parties register the contract when the object of the statement is a fixed asset. .