Leaving Soon? - Compromise Agreements

What is a compromise agreement?

A compromise agreement is a legally binding agreement between an employee and an employer that covers the termination of the employee’s job.

Compromise agreements are commonly used in redundancy situations and when an employee has been dismissed. They contain a number of important terms for both the employer and employee, and it is important that you get legal advice from an employment solicitor before you sign one.

What does it include?

A compromise agreement will contain the details of the severance payment your employer has agreed to pay you following the termination of your employment contract. It should set out the amount, when it is to be paid by, and how it is to be paid.

You will receive a severance payment in return for relinquishing your right to bring an employment claim against your employer in an Employment Tribunal or the civil courts. One of the main reasons compromise agreements are favoured by employers is that an employee has to surrender their employment claims and the employer will be free from liability.

Compromise agreements will usually contain a confidentiality clause that will prevent you from discussing the details of the termination of your employment, and the details of the compromise agreement, with anyone else. This clause is mainly included to protect your employer’s reputation.

Some employers also include a non-derogatory comments clause that prevents you from making negative comments about them.

The compromise agreement should also cover the notice of your dismissal and whether you are to receive payment in lieu of notice. Your employer may want you to leave work as soon as possible but they will still need to pay you for the notice period to which you are legally entitled.

If you are owed any wages, accrued but not taken holiday pay, or bonuses, these must be detailed in the compromise agreement if they are to be paid.

Do I need legal advice?

If you have been asked to sign a compromise agreement, you will need to speak to an employment solicitor for two reasons.

Firstly, you will need to speak to an employment solicitor for your own piece of mind. A compromise agreement is a legally binding agreement and therefore it is important that you fully understand what is expected of you before you sign it.

Secondly, the agreement won’t actually be valid or legally binding until an independent employment solicitor has looked at it on your behalf. This is to ensure that you are not giving up your right to make an employment claim without being properly compensated, and to identify if you have any other potential claims against your employer.

The employment solicitor must sign the compromise agreement to verify that you have received and understood their legal advice.

Can I still make a claim against my former employer?

There are certain circumstances where you will be able to bring a claim against your former employer even though you have signed a compromise agreement.

Personal injury claims for injuries sustained at work are not usually excluded by compromise agreements. However, it may be possible for your employer to exclude a personal injury claim if you were aware of the injury at the time the compromise agreement was signed.

If your former employer does not fulfil their obligations under the compromise agreement, for example if you do not receive your severance payment, you may be able to make a claim against them as your former employer may have committed a breach of contract.

Job Justice can help

If you have been offered a compromise agreement, you will need to obtain independent legal advice from an employment solicitor to ensure it is within your best interests to sign it.

Alternatively, you may have already signed a compromise agreement with your former employer and now require legal advice regarding a possible breach of contract claim.

We can put you in touch with one of our specialist employment solicitors. Simply call us for free on 0800 533 5799 or fill in our online contact form and we’ll be in touch to discuss your situation.


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