Compromise Agreements

What are Compromise Agreements?

Sometimes, and for various reasons, employers want to end a particular employee’s employment.  A Compromise Agreement lets the employment be terminated on particular terms. These terms can be agreed between employer and employee.

What is the main purpose of a Compromise Agreement?

The main purpose of a Compromise Agreement is to:

Why should employers use Compromise Agreement?

Advantages to the employer are:

• Avoiding tribunal proceedings costs to settle any disputes
• Knowing there will be no further issues to deal with for a particular employee

A Compromise Agreement can also deal with references.

When can employees be offered a Compromise Agreement?

Employees can be offered a Compromise Agreement before or after employment has been terminated.

Why offers should be made “without prejudice”

All Compromise Agreement offers should be made “without prejudice”. This means discussions between employer and employee will be off the record.

Important matters to consider

The law requires a Compromise Agreement to be in a special format.  We can check that the Agreement is correct.  The law also requires that the employee receives advice from a solicitor (or other appropriate adviser) about the Agreement’s terms and effects.  By signing the Compromise Agreement the employee will give away his or her rights to bring claims against the employer.

Who pays for the legal fees?

Usually the employer agrees to pay a specific contribution to the employee's legal fees for seeing a solicitor to sign the Compromise Agreement.  

What service will Spratt Endicott provide?

We will:

• Draft an appropriate agreement for your company's needs
• Advise you on any suggested amendments, including tax consequences of signing
• Write to you confirming our advice

Getting in touch

For further information on our Compromise Agreements service, please contact Carol Shaw on 01295 204140 or email cshaw@se-law.co.uk