FAQs about Compromise Agreements

COMPROMISE AGREEMENTS HILLINGDON

Why are compromise agreements used ?

Compromise agreements as suggested by the name promote employers and employees to come to a compromise where certain rules have not been followed (for example redundancy procedures required by law) such that the employee could be expected to have a genuine legal claim.  In exchange for agreeing not to go to an employment tribunal, the employee will be given a sum of money and other benefits.

So, if a sign a compromise agreement, I will not be able to pursue any claims against my employer ?

The general position is you will not be able to take any claims to court as a compromise agreement is taken to be a ‘full and final settlement’ of any legal claims and create a clean break between employer and employee.  However, it is possible that you will be able to bring certain claims, particularly where the agreement itself has made no reference to them.  Claims regarding pensions, personal injury and vicarious liability can be pursued against the employer.

Do I have to seek legal advice if I am offered a compromise agreement ?

Compromise agreements are governed by statutory law (laws made by parliament) and it is required by law that employees seek ‘independent legal advice’ before a compromise agreement can be considered valid.  In practice, a solicitor or trade union official will be considered independent sources of advice, so long as they do not share any relationship with the employer (if, for example, the solicitor is ‘in-house’ he wouldn’t be considered independent).

How much does it cost for me to receive advice on a compromise agreement ?

In the majority of circumstances, your employer will agree to pay your legal costs, so nothing!

Are compromise agreements negotiable ?

As mentioned before, compromise agreements are governed by statutory law (law passed by parliament) so the content of compromise agreements tended to be quite standardised in order to ensure compliance with rigid statutory norms.  However, it is possible to negotiate changes to the wording of the agreement so long as any changes are within the law.  It is, of course, also possible to negotiate the amount you will receive, particularly where the amount is lower than it should be given the circumstances.

My compromise agreement contains a confidentiality agreement.  What does this require of me ?

It depends on the wording of the confidentiality agreement itself, but most of the time you will not be allowed to divulge the content of the compromise agreement and possibly even the existence of it.  However, it is possible to agree to exceptions so that family members and any advisers are allowed to be made aware of the agreement.

My compromise agreement contains a deadline.  Why ?

Employers generally include deadlines in compromise agreements because they want to wrap up any resolved issues as quickly as possible and have you sign the agreement on terms which are perhaps more favourable to them.  Whilst it is important that you follow the deadline (particularly say if redundancy payments are way above statutory levels), in practice it is not a big issue if this deadline passes where negotiations regarding the agreement are taking place.

What now ?