Settlement Agreement in Employment Disputes in Mauritius

Often times in any given employment relationship, there are circumstances that bring a working relationship to an end. This may be due to the financial difficulties of the employer, a clash in the workplace or a breach of trust amongst others.


The termination of employment of an employee in Mauritius may entitle the employee to various claims including severance allowance.( not necessarily under the contract of employment, but also under the law generally). Therefore it is always a good practice to seek legal advice before terminating someone's employment in order to avoid excessive costs in the end.


We have at least once heard about " A bad settlement is better than a good lawsuit" and in an employment dispute if both the employer and the employee agree, the best way is to enter into a settlement agreement as this is less stressful and it allows both parties to part ways on amicable terms.


What is a settlement agreement?

A settlement agreement is a legally binding confidential agreement  between an employer and employee. A lump sum is usually paid in return for the employee's agreement not to pursue any employment claims or whatsoever claims arising from the employment or its termination. It is not rare also to have a settlement agreement where an employee has been at the service of the employer for a long period of time and both parties wish to end their relationship amicably. Therefore, if the settlement agreement is drafted correctly, this situation can be seen as a win-win.


For the settlement agreement to be legally binding, the employee will need to take legal advice before signing from an independent legal practitioner who has no links to the employer.


What is usually included in a settlement agreement?

In a settlement agreement you will usually find( non exhaustive list):-

  • Name and address of the Employer and Employee;
  • Business Registration/VAT Number of Employer and ID of Employee;
  • Lump Sum to be paid;
  • Waiver of potential claims that Employee/Employer might have against each other;
  • Confidentiality Clause;
  • Parties are mentally fit and authorised to sign the agreement (Usually it might be that the CEO delegates someone else to sign on his/her behalf);
  •  Employee undertakes to return all of Employer's property or this could be part of the settlement.

A settlement agreement can also include a restraint clause whereby the employee cannot seek employment in the same segment of business as his/her Employer for a specific period of time and also a clause preventing the Employee from bad-mouthing their ex-exployer or revealing any trade secrets.