Rumours in the Air
Laura Hails, Legal Executive
Should you have any other employment queries, please contact me on 01580 762248 or email info@pengelly-rylands.co.uk.
Have you heard rumours at your workplace that there may be redundancies? If so, your employers may give you a compromise agreement. A compromise agreement is a legally binding agreement, setting out the terms and conditions reached when a contract of employment is to be terminated or a dispute is to be resolved.
The purpose of a compromise agreement is to provide certainty for both parties. In signing an agreement, you are accepting the settlement terms and excluding your right to make a claim against your employer to an employment tribunal. This has the effect of turning the redundancy package into a "full and final" settlement.
There are also a number of different circumstances when a compromise agreement can be used and have the same full and final effect.
The compromise agreement will state the full breakdown of the payments you are receiving. Whether tax is payable depends on how the payment is made up. A confidentially clause is fairly standard in compromise agreements, and it may also provide for post-termination restrictions (e.g. not working for a competitor).
Compromise agreements can be written in very legalistic language and can refer to legislation which you may never have heard of. It is very important that you understand the effect of the agreement, and it is a legal requirement that you receive independent legal advice from a professional on what the agreement means. A solicitor will advise you on the terms, ensure you have correct protection and should also advise you if you are being offered a suitable amount of compensation.
If you are concerned about the costs – in most cases employers will foot the bill!
However it works both ways. A compromise agreement has to be suitable for the employee as well as the employer and we will be able to advise you on whether the terms proposed are fair, or whether we could enter into negotiations in order to try to improve the settlement for you.
Should you be given a compromise agreement and need legal advice, please do not hesitate to contact me or Rebecca Bell.
Published November 2009
