A Compromise Agreement is a legally binding agreement that allows for the safe termination of an employee’s Contract of Employment on mutual terms.

The agreement records the terms agreed between the parties and in return for a compensation payment the Employee waives their right to and agrees not to pursue any Claim that they may have to an Employment Tribunal. Compromise Agreements can be a very useful tool in ending an employment relationship, especially where the Employer’s wish for the relationship to come to an end is not connected with the grounds for dismissal.

With the number of employment tribunal claims on the rise year on year and the current economic climate leaving Employers with no alternative but to make redundancies, an increasing number of Employers are using Compromise Agreements as a means of avoiding potential claims, especially in redundancy situations.

Compromise Agreements are recognised by Statute and are the only way that an Employee can waive their right to bring a Tribunal Claim. There are a number of benefits in using a Compromise Agreement;
Certainty that a claim will not be bought.
Negotiated Terms give flexibility. For example if an Employer has failed to protect its legitimate business interest under the Contract of Employment it can negotiate for restraint of trades to be included.

Saving management time.
• For example, by offering the agreement during the initial stages of a redundancy consultation and/or early in a disciplinary and/or grievance procedure.

• Saving in management time in defending an Employment Tribunal Claim

Mitigating risk and minimising the involvement of staff in an internal dispute or them being called as a witness in an Employment Tribunal that may adversely affect morale, loyalty and commitment.

Avoiding potential adverse publicity both within your business and externally.
Significant reduction in legal costs.

Our Employment Team can advise whether a Compromise Agreement is the correct route for you to take, draft an Agreement tailored to your needs and negotiate on your behalf with the Employee or their Representative.

For further information please call Claire Fogarty or any member of our Employment Team.

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