Compromise Agreements

You cannot contract out of your employment rights except where either:

• An agreement has been reached with the assistance of ACAS,

• A settlement has been reached at an Employment Tribunal, or

• A Compromise Agreement has been drawn up and agreed.

The benefit to you of a Compromise Agreement is that you have a legal document setting out how much compensation your employer will pay you as compensation for no longer having a job.  It is quicker than pursuing a claim in an Employment Tribunal where there is always a risk you might not be successful.

The other advantage of the Compromise Agreement is that it may contain clauses regarding giving references for you on request and what the reference will say.  This gives you peace of mind that any future employers will receive a reference from your current employer that will not contain anything negative.

• A breakdown of the payments you will receive when your employment contract ends and which sums will be free of tax.

• Confidentiality clauses relating to your employment, confidential information you have been party to during your employment and also confidentiality about the terms of the Compromise Agreement.

• You will usually be required not to make negative comments about your employer and your employer may agree not to make negative comments about your employment with them.

• Restrictive Covenants – these are clauses that may stop you approaching previous clients on behalf of a new employer or stop you approaching your current employer’s staff.  If you have restrictive covenants in your current employment contract, these will be repeated in the Compromise Agreement.  However, new restrictive covenants may be added so you will need legal advice to ensure you are not hampered from new employment or starting up your own business, depending on your plans.

• References – you can agree what any future references will say.

• The Compromise Agreement will contain a list of statutes under which you will agree not to bring a claim.  These will include the Employment Rights Acts, Discrimination Acts, etc.  An employer needs to list these.

If you are unsure of or have any queries regarding terms in a Compromise Agreement, contact us to discuss the specific terms.

According to the Employment Rights (Dispute Resolution) Act 1998, advice regarding Compromise Agreements can only be given by a qualified lawyer, a qualified trade union official or a qualified advice centre worker, all of whom have to be covered by an appropriate certificate of indemnity insurance.

A solicitor will have indemnity insurance and will be able to advise you if the terms of the Compromise Agreement are right for you and whether the amount of compensation being offered is fair.  Compromise Agreements can be packed with legal jargon and refer to Acts and Regulations so it is vital you understand the full implications of what you are being asked to sign.

Lawson-West solicitors have a client charter promising to communicate with you in a jargon-free way.  We can advise and negotiate any terms that may be unfavourable to you.

Your employer will usually pay your legal costs for a compromise agreement, although your employer may set a limit so we will endeavour not to charge more than your employer has agreed to pay.

Lawson-West also offer a free initial consultation so it will cost you nothing to find out where you stand and how we can help you with a compromise agreement.

All discussions are in confidence and we will negotiate with your employer on your behalf.

Once a compromise agreement is signed by all parties, it is a binding agreement in full and final settlement so cannot be re-negotiated.  If you are unsure of or not happy with any terms in the Compromise Agreement, you should seek legal advice.

You do not have to sign a compromise agreement.  We will advise you whether the Compromise Agreement is fair and what you are entitled to when your employer ends your contract of employment. 

We can also advise if you have a claim for unfair dismissal and whether you are likely to succeed if you make an employment tribunal claim.  If you do not sign the Compromise Agreement, you would maintain your right to pursue an employment tribunal claim.