Compromise Agreements

A compromise agreement is a legally binding agreement between the employer and employee. The agreement is in writing. The employer instigates the document.

The agreement details:

the terms and clauses related to the termination of the employee’s contract with the employer including;
- payments (severance, bonus, lieu of notice, etc);
- termination date;
- confidentiality;
the employment legislation which the employee cannot refer to to raise any future claim against the company;
legal representation and associated costs.

The employer normally drafts the agreement, discusses the content with the employee and the employee then seeks a solicitor to advise them on the content of the agreement. The employer pays for the solicitor’s fees and usually sets a limit for the associated costs.

Compromise agreements are not without risk. An employee may choose to not accept the terms of the agreement and even after negotiations between the employee and the employer an amount of money may not be agreed upon. The employee may at a later date raise an ET claim against the company where a compromise agreement has failed to be agreed between both parties. Such a claim may include constructive dismissal.

For further information on compromise agreements simply contact us on 02088168726