Compromise Agreements

If you are being made redundant or your employer wants you to agree to leave they will often ask you to sign a Compromise Agreement.  The Compromise Agreement sets out the suggested compensation that you will receive from your employer if you agree to leave.  All employers should insist that you take independent legal advice as the agreement once signed will often prevent you from taking further action against your employer and will often contain clauses which can restrict your future employment opportunities and impose obligations that you must perform.

The Compromise Agreement should resolve any problems between the parties and usually removes the right for either party to take the matter to an Employment Tribunal.  It is extremely important that you  make sure that you are receiving the right amount of compensation and that the agreement doesn’t contain clauses which will cause you difficulties in the future.

You should never sign a Compromise Agreement without receiving legal advice because:-

·        You may not receive the right amount of compensation.

·        There may be tax implications about the payments you receive.

·        Your employer may want you to agree to things which will cause you difficulties in the future.

Advantages of a Compromise Agreement

·        Usually your employer will be making a payment to you.  Some or all of that amount be tax free.  It may also be possible to get your employer to agree to include additional benefits into the agreement for example the transfer of healthcare provisions or an agreed favourable reference.

Legal Advice and costs

It is essential that you receive legal advice before entering into a Compromise Agreement.  Most employers will insist on independent legal advice being taken and will usually pay your legal costs. 

Contacting us. 

Please email our employment law specialist on aharkus@etlp.co.uk or call us on 01633 251801 or alternatively if you complete our online enquiry form we will contact you.