The Meaning of a Compromise Agreement

Well, you can’t please all of the people all of the time. The same goes for employer/employee relations. Sadly there are times when not all goes smoothly and employment, for whatever reason, needs to be terminated.

The circumstances might be perfectly amicable or they could be contentious. Redundancy, in particular, is often the reason for making a compromise agreement. The main point of the agreement is that when an employee leaves the company, the parting can be achieved with employment ending on agreed terms.

Protection for the employer is assured with a compromise agreement in place which is why it can be a valued document to obtain. Any further future claims the employee could otherwise make will be prevented. This of course is a great peace of mind for the employer; it means a former employee cannot start bringing claims against an employer in a court or tribunal.

A compromise agreement can be offered to a departing employee, before they leave, or after employment has been ceased. The important thing to get right at this stage is to insert the words: Without Prejudice. Sounds a little fierce? Well, it isn’t because if the compromise agreement is not accepted, it means the terms of the agreement cannot be used as evidence in any later proceeding.

Okay, so this might be good news for the employer but shouldn’t both parties have protection rights? Yes! That’s another main reason for these compromise agreements.

An employee has the certainty of a settlement sum. It is usual for the employee to enter into the compromise agreement to obtain these costs. It is limited to a specific amount but it is customary, although not a legal requirement, for an employer to agree to pay the legal costs incurred by the employee. In this way it ensures an employee cannot start making absurd claims, leaving the employer stripped of all funds. In order to settle the matter legally and avoid storing up future problems, before proceeding, it is good for the employer to be aware of a payment figure due to the employee.

Drawing up a legal UK compromise agreement is a sensible decision; it offers a simple precaution, avoiding costs of tribunal proceedings that could occur at a later date.

To be valid, a compromise agreement must be in writing and specify the claims being settled. In addition, the employee should seek independent legal advice from specialist compromise agreement solicitors. These solicitors will advise on the terms of acceptance and check that the conditions which regulate compromise agreements are satisfied.

For expert legal advice on an employment Compromise Agreement, contact our Employment Law Solicitors  today in our Salisbury, Andover or Amesbury offices.

Employment Law Team

For specialist legal advice, contact our Compromise Agreement Solicitors:

Salisbury Office
  Nigel Mills
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 tel: Salisbury (01722) 422300
email: Nigel Mills