Compromise agreements
A compromise agreement is a legal agreement given by an employer to an employee to sever their employment, normally in redundancy situations.
It usually covers the terms of the severance, including any payment and other benefits. It confirms that in return for the severance pay the employee agrees not to pursue any claim via an employment tribunal for unfair dismissal.
They are fairly standard agreements but it is very important that employees take advice from a specialist employment solicitor to make sure they understand all of the terms.
Most compromise agreements will cover:
- A breakdown of the payments to be made
- Explanation of whether the payments are tax free
- Confidentiality clauses
- Any restrictive covenants (for example preventing the employee from working for a competitor for a given period of time)
- Whether payments are made in lieu of any untaken holiday
- Any property of the company such as laptops and mobile phones which need to be returned
- The legal claims which the employee will be giving up in return for signing the document
- How much will be paid to the employee’s legal fees
- The wording of any reference
An employee will need a solicitor to explain the compromise agreement to them as they are nearly always full of legal jargon. The solicitor will also be able to advise on whether the employee is being given adequate compensation and whether the terms offer adequate protection.
The cost of consulting a solicitor should be paid by the employer. Employees are normally at liberty to choose a solicitor, although employers may supply a list of solicitors they have an arrangement with.
If you are unhappy with the terms of the compromise agreement an employment solicitor would be able to advise you on your rights.
Human Law Mediation are available to advise on compromise agreements for employees, managers and directors. All work is undertaken by qualified solicitor Justin Patten who has 12 years experience as an employment law solicitor and mediator. Contact Human Law Mediation on 0844 800 3249 or email Justin Patten via the website.
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