Compromise Agreements

WHAT IS A COMPROMISE AGREEMENT?

Compromise agreements are used following your employment being terminated by your employer. They should include details regarding any severance pay that you are entitled to along with any conditions from your employer in the event that you sign the compromise agreement.

“We help and advise with compromise agreements throughout England & Wales.  Most of our advice can be given over the telephone, through skype or by email.”

Employers are increasingly using compromise agreements as a method to avoid any future claims against them though the Employment Tribunal, such as redundancy.  However, many compromise agreements include much wider terms than just redundancy and can disallow a wide number of potential proposed claims indefinitely.

Compromise agreements are now a recognised method of terminating employment contracts and are deemed binding without any employment tribunal proceedings having taken place. It is important to note that compromise agreements have a “full and final settlement” effect.

You must have the compromise agreement explained to you in full by a solicitor before you sign. In general terms your employer will allow your legal fees for this advice to be paid by them.  For all intents and purposes the advice for you is free of charge.  Once you have been advised the solicitor must certify that you have received that advice.

WHAT TERMS ARE IN A COMPROMISE AGREEMENT?

Compromise agreements can contain a number of terms however, the following are the mains ones of importance:

1. PAYMENT – the compromise agreement will set out the payment your employer proposes to make and which portions [if any] will attract tax. Usually any payment up to £30,000 in compensation will be paid free of tax, but you will have to indemnify your employer in respect of any un-forseen claims from H M Revenue & Customs.  It should also be noted that any unused holiday pay will be subject to tax at your usual PAYE rate.
2. CONFIDENTIALITY - the compromise agreement will normally include a confidentiality clause which will specify what matters you can and cannot talk about or disclose to others with regards to your employment and or the compromise agreement.  Such matters often include your employers’s working practices, trade secrets, etc.
3. RESTRICTIVE COVENANTS - the compromise agreement may include terms that will continue to have effect following the signing of the agreement.  The agreement may include restrictions placed upon who you can work, how long you can’t work for a competitor or a geographic location that you can’t work in for a specified time.
4. STATUTORY CLAIMS - the compromise agreement will generally list a number of statutes and or regulations which, upon signing the agreement, through which you will not be able to make a claim against your employer.

You must remember that the compromise agreement is designed to be a “full and final settlement” of all matters pertaining to your employment with that employer.

HOW MUCH WILL ADVICE COST ME?

It is usual practice for your employer to pay the costs of a solicitor to advise you  on a compromise agreement. In reality the advice should cost you nothing.

WHY DO I NEED ADVICE?

Employment Law is a very complicated area which is constantly changing. Our daily lives and families rely upon our employment and the ability to bring in a wage. You need to make sure that signing the compromise agreement is best for you and that there are no other remedies available to you.

WHAT DO I DO NOW?

If you have been sent a compromise agreement and want to be advised then please call Haworth & Lees Solicitors on 0844 332 7454.  We can deal with most matters over the telephone or by email, once we have had sight of the agreement.

WHO WILL ADVISE ME AT HAWORTH & LEES SOLICITORS?

You will only ever be advised by one of the Partners.

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