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Our employment law team is highly experienced in advising individuals with Compromise Agreements, both straightforward and complex. We explain below what a Compromise Agreement is and what happens when you are offered one by your employer.
What is a Compromise Agreement?
A Compromise Agreement is a legally binding written contract between you and your employer. The agreement usually provides for some kind of “severance” or “termination payment” to be paid by your employer in return for which you, the employee, agree not to pursue any claims that you may have, arising out of your employment or its termination, in an Employment Tribunal or a court. Compromise Agreements are commonly used by employers, as it is one of the few lawful and binding ways in which an employee can be prevented from bringing a claim for breach of his or her rights, and it is a useful way of providing peace of mind to the employer and certainty to the situation.
Legal advice
A Compromise Agreement can only be lawful and binding if an employee receives advice from a “relevant independent adviser” before signing the agreement. We recommend that you always seek advice from a specialist employment lawyer for this.
At Ashton KCJ, our employment team will advise you not only on the implications of signing the agreement, but also on the merits of any claim you may have and the amount of money that you have been offered. We will assist in negotiating improved terms on the agreement itself, as well as an improved severance payment, if appropriate.
We will provide advice on the peripheral but important issues such as confidentiality and any post termination obligations, the provision of a reference, incidental benefits, as well as the tax treatment of the severance payment. We will ensure that you are fully informed about the implications of entering into the Compromise Agreement.
Legal fees
It is customary for an employer to offer to contribute towards your legal fees for seeking advice on the terms of the Compromise Agreement that they have asked you to enter into. Typically, the contribution is between £250 and £500 plus VAT. With more complex agreements or for senior employees, the contribution is often higher.
We will discuss the fees with you at the outset. Where you are in full agreement with the terms of severance being offered, and the Compromise Agreement itself has been properly drafted to reflect these terms, the fees offered are usually sufficient to cover our fees.
In the situation where the severance terms are insufficient and/or the Compromise Agreement itself is inadequate, then the contribution offered may not be sufficient to cover all of the work necessary. We will advise you if we believe this is likely to be the case, and we will update you throughout the transaction. In the first instance, we will seek an increased contribution from your employer. If the employer’s contribution is unlikely to be sufficient to meet the total fees, we will discuss this with you and agree terms with you. We would normally expect to be securing an increased severance or improved terms for you in such circumstances.
How to instruct us
If you have any questions or wish to discuss how we can help you with your Compromise Agreement or if you would like to instruct us to deal with your Compromise Agreement, then please call 0800 587 0093 and ask to speak to Hywel Griffiths or Julian Outen.
Alternatively e-mail us providing your full contact details, including the name of your employer. We will carry out a check to rule out any conflict of interest and will then contact you to discuss the details of your agreement and how we can help.
Ashton KCJ solicitors can also assist in the following areas:
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