This article looks at the most common questions asked about a compromise agreement in the UK.
When are compromise agreements used?
A compromise agreement can be offered by an employer that is going to breach an employee’s rights by terminating their employment contract. It is normally the situation in which an employer accepts that they may lose at an Employment Tribunal when a compromise agreement is offered. Therefore they can be used in cases of discrimination, unfair dismissal claims, constructive dismissal and redundancy.
Compromise agreements are being used more and more frequently in redundancy cases. Employers have more responsibilities under the law when making people redundant then ever before. Due to this, employers often end up breaching an employee’s rights when making them redundant. A compromise agreement is consequently used by the employer to compensate the employee for this breach and to prevent them from making a claim against them at the Employment Tribunal.
Does a compromise agreement prevent me from taking any legal action against my employer?
No. A compromise agreement will only apply to the subject of the original breach. The law makes it very clear that it is not legal for an employee to ‘contract out’ of his/her employment rights. Therefore if a separate claim against your employer arose you would not be barred from bringing this before an Employment Tribunal, irrelevant of the agreement.
Generally claims that are made after an agreement is signed are as follows:
- A breach of contract claim (regarding the terms of the agreement)
- Personal injury claim (which is not excluded by the agreement)
- Claims in relation to accrued pension monies
As mentioned above, if an employer only really signs a compromise agreement when they know they might lose at an Employment Tribunal, why should I not take them to a Tribunal?
Firstly an employer may wish to keep the whole matter private rather than fighting the case before an Employment Tribunal. Therefore it is not always the case that the employer knows that they ‘might loose’.
Secondly, compromise agreements have significant cost benefits in comparison to taking a claim before a Tribunal. The following major savings can be made if such an agreement is signed:
- Tribunal fees
- Extensive legal fees
Another reason why there are cost savings is because it is usual practice for the employer to pay for the employee’s legal costs when seeking advice regarding a compromise agreement. When taking a claim to an Employment Tribunal however it is normal practice for both parties to pay their own legal costs at the conclusion.
Lastly, a compromise agreement can save you the stress and drama of taking a claim before a Tribunal. It keeps the matter private and allows party autonomy. Party autonomy means that you remain in control of what is agreed rather than passing this control over to an impartial judge.
What if my employer fails to pay me the agreed compensation, can I enforce the agreement like a Tribunal judgement?
A UK compromise agreement is a legally binding contract. If your employer fails to pay the compensation money in the time agreed, you can sue them for breach of contract to enforce payment. Conversely, if you do not adhere to any agreed warrantees under the agreement then you also can be sued for a breach of contract.
Don't forget that you need to take independent legal advice on an employment compromise agreement for it to be valid – so make sure you consult specialist compromise agreement solicitors.
For expert legal advice, contact our Employment Law Solicitors today in our Salisbury, Andover, Verwood or Amesbury offices.