Compromise Agreements

The use of Compromise Agreements is becoming increasingly common.

A Compromise Agreement between an employer and an employee is a legally binding settlement between the parties and is usually offered shortly before or after a term of employment is ended. They allow for a clean break in the employment relationship, whereby an employee will waive their rights to bring any potential claims in return for agreed compensation.

However, they are not always appropriate and to be binding, employees must seek independent legal advice. In our experience it is imperative that both employers and employees seek advice regarding any proposed agreement.

Employees need to consider the full implication of what they are signing and what they are potentially giving up and whether the compensation element is satisfactory. In some circumstances, it may be considered inappropriate to sign the Compromise Agreement and this could lead the way for further negotiation with respect to increasing the compensation element and/or issuing a claim within the Tribunal.

For employers, It is important to ensure that any level of compensation has been assessed correctly in view of the likelihood of any damages claim that may be made. It is also important where discrimination may be alleged, that Compromise Agreements are delivered in an appropriate manner, otherwise they could be relied upon in a tribunal hearing, should a claim be issued.

If you require any advice regarding a Compromise Agreement that has been proposed or whether or not to propose a Compromise Agreement, please do not hesitate to contact Katie Kearns on 024 7655 3181 or email: