Compromise Agreements

Compromise agreements are legally binding agreements which are used to formalise a full and final settlement between an employer and an employee.  The consequences of an employee signing a compromise agreement will be that they are then prevented from bringing or pursuing a claim before an Employment Tribunal or any claim in the future.

When are Compromise Agreements used?

Compromise agreements are useful tools for an employer to terminate an employee’s employment without worrying about having to face a future claim.

Statutory Requirements

Compromise agreements must comply with a number of conditions laid down law.  Most importantly compromise agreements must be in writing and the employee must have received independent legal advice as to the effect of the proposed agreement and the effect the agreement will have on an employee’s ability to pursue their rights before an Employment Tribunal.

Important Points to Consider When Seeking Advice on a Compromise Agreement

There are many things to consider when seeking advice on a compromise agreement, but some of the most frequent issues which consideration are listed below:

• Tax implications of the termination payment
• Provision of a reference
• Cost contribution for the independent advice
• Reminder of existing restrictive covenants and confidentiality clauses and provision for any new clauses
• Provision for resignation from office of Director
• Tax indemnity
• Exclude personal injury and accrued pension right claims

Our employment team can help you draft a compromise agreement or if you are an employee advise you on the consequences of signing a compromise agreement.

Bhayani Bracewell can also help you with:

* Employment Advice and Representation

Bhayani Bracewell are a firm of specilaist employment law solicitors based in Sheffield and Doncaster.

We will show you how to use the law to achieve the most favourable outcome for you.

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