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READING FAQS ON COMPROMISE AGREEMENTS

Why have I been offered a compromise agreement?

If your employment has or will be terminated and you have a potentially strong legal claim against your employer, you may be offered a compromise agreement.  Subject to this definition, the circumstances in which compromise agreements are numerous. However, they are commonly offered where an employee has a possible unfair dismissal (or constructive unfair dismissal) claim; for redundancies; for employees who are too sick to continue working or where an employee has left work due to some sort of grievance.

If you accept the agreement, subject to having sought “independent legal advice”, you will agree to waive the majority of potential legal claims in return for compensation and possibly other benefits.  You cannot, however, be forced to agree to waiver personal injury claims, pension claims and claims relating to the breach of the agreement itself.

Why do I have to get legal advice?

Generally speaking, you are required to seek legal advice to prevent you from entering into an agreement that could be unduly prejudicial to your legal rights.  Employers are naturally in a stronger bargaining position, so this requirement prevents your employer from exploiting this.

Practically speaking, without independent legal advice, your agreement will not be legally valid.  If your employer breaches the agreement, you will not be able to rely on the agreement in court.

Will I have to pay tax?

For compensation packages up to £30,000, you will generally not have to pay tax.

Can you negotiate the agreement?

Yes.  One of the reasons you have to seek legal advice is to ensure you get the best deal possible.  Our solicitors are experienced in negotiating the best possible packages for their clients, and in our experience, the circumstances which led to the agreement being offered do not necessarily impact the amount you can receive.

Will I have to pay to get advice on the agreement?

Generally speaking, employers will offer to pay your legal cost or at least provide a contribution, although there is no legal duty on the employer to do so.

I have been asked to sign a confidentiality agreement.  What are my duties under such an agreement?

It depends on the content of the agreement.  You might be legally obligated to not tell anyone (bar your immediate family) about the existence or the content of the agreement.