Compromise Agreements

If you have been made redundant or are in the process of losing your job chances are your employer will require that you sign a compromise agreement. As employment law specialists we have dealt with hundreds of compromise agreements particularly given the recent economic downturn. We are full members of the Employment Lawyers Association and have the expertise and skill to advise and negotiate an increased settlement on your behalf.

Should you need advice please contact aa@arorabailey.co.uk now.

Why choose us?

Advice is free. You won’t pay us a penny. Compromise agreements often contain a provision that your employer will pay your legal costs for obtaining independent legal advice.
Efficient. As soon as you instruct us we will contact your employer and request that the draft compromise agreement is sent to us immediately via email or fax. We will then contact you by telephone and advise you or arrange an appointment should you prefer. If necessary, we will negotiate on your behalf an increased settlement and thereafter prepare and send an “Advisor’s Certificate” to your employer immediately.
Fast. Typically, your employer will have a signed compromise agreement and Advisor’s Certificate from us within two days of instruction. This ensures that you receive your money from your employer quickly.
Convenient. We do not necessarily need to see you in person to advise you.
Independent. We will not advise you if we have acted previously for your employer. There is no possibility of a conflict of interest.
Insurance backed advice. Unlike other advisor’s we have comprehensive professional indemnity to cover any loss that you may sustain as a direct result of any advice that we may give.
In-house. Our own solicitors will advise you. We do not act as a third party, nor refer your matter to an outside firm or agency.

What is a compromise agreement?

Compromise agreements set out the terms and conditions that have been agreed between you and your employer on termination of your contract of employment. The intention is that the compromise agreement will be a final settlement of all claims in connection with the termination of your employment. This avoids either party having to worry about bringing or defending claims in the Courts or Employment Tribunals. If no agreement is reached then these proceedings might be needed to sort out your claims.

What clauses are typical in a Compromise Agreement?

Certain clauses must be contained in a compromise agreement to be valid at law. Common clauses include-:

Payment. This clause will state how much you will receive on termination of your employment. To calculate how much your employer must pay you on redundancy just click our redundancy calculator. Other payments may include compensation for loss of employment, unpaid holiday, commissions and bonuses.
Independent legal advice. The compromise agreement will state that you have received advice from an independent advisor who holds an appropriate policy of insurance.
Restrictive Covenants. A restrictive covenant is a promise between you and your employer that you will not for example, work within a ten -mile radius of your employer or set up a business in competition. Unless the compromise agreement specifically states to the contrary, any restrictive covenants in the contract of employment are not affected by the agreement. They continue to be binding - if they were before. The implied obligations not to misuse trade secrets also apply unless the parties have agreed otherwise.
References. In most cases employers are not obliged to give references about former employees. This is sometimes changed in the compromise agreement. It is not unusual for an employer to attach a copy of the reference to the compromise agreement itself.
Full and final settlement. This means that once your employer has paid you the amount under the compromise agreement you cannot bring a claim against your employer except for loss of accrued pension rights and personal injury;

Why should I sign a Compromise Agreement?

Usually an employer will agree to give you an enhanced payment in return for signing an agreement which confirms, that once your employer makes payment you will not bring any claim except for loss of pension rights and personal injury.

What will happen if I do not sign a Compromise Agreement?

If you do not sign, you will only receive a certain amount of money for loss of your employment. For example, if you have been made redundant you will only be entitled to a statutory maximum. To calculate how much you should receive click our redundancy calculator.

If you have been unfairly or constructively dismissed you may be entitled to receive a greater amount than that being offered by your employer. We will advise you on the prospects of succeeding and the costs involved in doing so, before you decide whether you want to sign the compromise agreement.

Must I obtain independent legal advice?

Yes. You must receive independent legal advice from a “relevant independent adviser” who must advise you on the terms and effect of the agreement that you are signing and your ability to pursue a claim before an employment tribunal or other court. It is important, that you obtain advice from an employment law expert who can advise you on any potential claim that you may have before signing.

If I sign the Compromise agreement can I sue my employer in the future?

Yes, but only in relation to accrued pension rights and personal injury.

What do I do next?

Just telephone or email aa@arorabailey.co.uk to discuss your requirements.

Our employment law team has produced a series of free employment law advice guides for your information.