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:
- Settle all issues between employer and employee
- Stop employees bringing future claims against employers, in any court or tribunal, about things that happened during their employment
What do employees get from signing a Compromise Agreement?
Advantages to the employee are:
- Knowing for certain what you will be paid
- Avoiding tribunal proceedings costs to settle any disputes
- Being paid quickly after signing the Agreement
A Compromise Agreement can also deal with references, letting you know what your employer will say about you to future employers.
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 you receive advice from a solicitor (or other appropriate adviser) about the Agreement’s terms and effects. By signing the Compromise Agreement you will give away your rights to bring claims against your employer, and the law wants you to know about these before you sign.
Who pays for the legal fees?
Usually the employer agrees to pay a specific contribution to your legal fees for seeing a solicitor to sign the Compromise Agreement. However, you will be our client, and it is your views that we will represent.
What service will Spratt Endicott provide me with?
We will:
- Advise you on Agreement’s terms and effects
- Advise you on any suggested amendments, including tax consequences of signing
- Write to you confirming our advice
In addition we can also negotiate the Agreement for you if you prefer. However, this may involve incurring legal fees that your employer would not pay for. This will only ever be offered as an option, and you are under no pressure to choose it.
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