Compromise Agreements
Compromise Agreements are contracts between an employer and employee which facilitate the termination of the contract of employment. Essentially the purpose of a Compromise Agreement is to prevent an employee from bringing a claim at the Employment Tribunal.
Employees
Employees may be offered a Compromise Agreement where they have been made redundant or where they have a dispute with their employer and they wish to leave employment having agreed the terms of their departure beforehand. Alternatively, following a dismissal, an employee may be given a Compromise Agreement before a claim is made at the Employment Tribunal.
Compromise Agreements are written in legal language and often contain complicated clauses concerning restrictions on their ability to work following termination of their contract and the tax implications of any severance payment. An Agreement may also include a draft reference. We provide clear and coherent advice to employees about the terms of their Agreement.
Where an Agreement is inadequate or an employee believes that they should be paid more than the amount payable in the draft Agreement, we can attempt to negotiate an amendment to the Agreement. We can also advise employees on their options which may include not signing the Agreement and making a claim to the Employment Tribunal.
For a Compromise Agreement to be valid, an employee must receive advice from an employment law specialist. Most employers contribute towards the employees legal fees and, where they have done so, we normally limit our fees to the amount which the employer is contributing so our services are free to the employee.
A settlement can also be reached with the employer following a claim having been made at the Employment Tribunal. We can assist in negotiating these settlements and in drafting the appropriate terms.
Please contact us if you have a Compromise Agreement and we can usually see you that day or soon thereafter.
Employers
It is important to provide an employee who is leaving employment with a comprehensive Compromise Agreement which is tailored to their specific situation. “Off the peg” Agreements may subsequently be found to be unenforceable. You may wish to include post termination restrictions (restrictive covenants) which, unless properly drafted, are often invalid.
Providing an employee with a Compromise Agreement can save costs and avoid lengthy litigation. It is important to obtain legal advice if you are planning to make staff redundancies and/ or there is a dispute with an employee which may lead to their dismissal or resignation.