Employment Law: Learning the Art of Compromise Agreements...


By Joanna Yates

What is a compromise agreement?

In employment law, a compromise agreement may be given to you by your employer when your employment is terminated. By signing this legally binding agreement, you accept a full and final pay out from your employer in return for giving up your legal rights to make a complaint against them to an employment tribunal.

Why do I need an employment solicitor if I have a compromise agreement?

Think about it this way – once you sign your compromise agreement you are giving up any future legal rights you currently have to make any claim, e.g. for unfair dismissal or discrimination by your employer. The agreement may also contain clauses which have an effect on you future employment, such as a restrictive covenant, which will be binding on you once you leave. It is therefore absolutely vital that you get an expert employment solicitor to review the offer your employer has made and ensure you are happy to accept. Once you sign, there is no going back.

Which solicitor do I use?

You must use an independent employment solicitor.  Even though your employer is paying for the solicitor (see below), it is important to remember that the solicitor is working for you and it is their job to act in your best interests alone. Contact law can find you a specialist independent employment solicitor, recommended by other clients in your exact situation, whom they have successfully advised.

What is the process involved in signing a compromise agreement?

Your employment solicitor will go through each clause, explaining all the legal jargon to you in plain English. They will ensure you are being offered the right pay out and then sign the agreement to prove you have received independent legal advice.

You can have a meeting with an employment specialist in person, or alternatively, you can email or fax a compromise agreement to an employment solicitor who can then go through it with you over the phone. This is a particularly popular and efficient option for you if you need to get the compromise agreement signed off urgently.

How much does it cost?

Great news! It will cost you nothing as your employer has a legal obligation to pay for you to consult with an independent employment solicitor and have them sign it off and/ or make amendments. In my experience, the budgets employers allow for compromise agreements range from £200 - £1000, depending on your employer, your salary and the circumstances of your dismissal.

Do I have to sign the compromise agreement I am offered?


What are the consequences of not signing it?

Well, if you refuse to sign it there will not be a legally binding agreement preventing you from making a claim to an employment tribunal against your employer. An employment specialist can advise you on whether it is in your best interests to accept the compromise agreement or whether it would be worthwhile complaining to an employment tribunal. If you are just contesting the amount of pay out offered, a specialist employment solicitor can help you negotiate a higher amount.

Always remember to seek the advice of an expert employment solicitor before you decide whether to accept or decline your compromise agreement. Contact law works regularly with successful employment law solicitors covering all employment law problems - contact us on 08001 221 2299 or fill in a web-form to talk with one of our advisors.

Joanna Yates is one of Caven’s most experienced and knowledgeable telephones advisors.

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