Compromise Agreements

A Compromise Agreement is an agreement between an employer and employee signed either shortly before or following the termination of employment which essentially extinguishes all claims that an employee may have against an employer following termination of employment.

For a compromise agreement to be valid it is necessary for an employee to have taken independent legal advice and for the solicitor advising the employee to sign the compromise agreement confirming such advice.

There are enormous advantages for an employer requesting that his employees sign a compromise agreement as it effectively ensures that the employer is not subsequently involved in litigation before an employment tribunal. The benefits becomes even greater if an employer has not acted entirely lawfully when terminating employment particularly the case in the context of redundancy.

An employee should always think carefully before agreeing to sign a compromise agreement and should take advice from a trusted advisor. There are too many legal advisers that simply sign a compromise agreement without exploring the background to the termination and discussing with the employee whether it is actually in the employee's interests to sign the agreement. An employer will usually make a contribution towards the costs of the person taking legal advice in respect of a compromise agreement, such contributions usually being in the region of £300 £500.

Before advising an employee on a compromise agreement it is vital that we first receive a copy of the compromise agreement and understand the factual background of the termination, so when we meet with you we then discuss not only the terms of the compromise agreement but also whether changes to the same should be negotiated or indeed whether the compromise agreement should be signed at all.