Compromise Agreements: A Good Way Of Resolving Employment Law Disputes

By Author: Richard Antrobus
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In the UK, where there has been an irretrievably breakdown in the relationship between employer and employee, one possible solution is for both parties to enter into what is known as a 'Compromise Agreement'. A Compromise Agreement is a legally binding agreement which allows the employee to receive an agreed lump sum as compensation for loss of office, the first ₤30,000.00 of which is tax free (plus an agreed reference in certain cases), in return for agreeing not to pursue their case against the employer to the Employment Tribunal.

Most types of employment law dispute can be resolved by way of Compromise Agreement, anything from an unfair dismissal situation to race and sex discrimination.

To be valid, the Compromise Agreement must be in writing, specify the dispute being settled, and state that the conditions governing Compromise Agreements have been complied with. The employee must also have received independent legal advice on the Compromise Agreement from a qualified person insured to provide it (i.e. the employee’s solicitor), and the Compromise Agreement must identify who that ...
... person was. Usually, the employer pays the costs involved in the employee taking this advice.

The standard terms that are normally incorporated into the Compromise Agreement include: the size of the payment, that the employee will not pursue any claim against the employer, that the first £30,000.00 will be paid tax free, that the employer will provide the employee with an agreed reference, a tax indemnity, confidentiality, no derogatory remarks by either party about each other, return of company property, and that the employee will continue to abide by the restrictive covenants in their contract of employment.
About Author:
Richard Antrobus is a Solicitor with The Employment Law Solicitors who handle dismissal and discrimination cases on behalf of both employers and employees nationwide throughout the United Kingdom. He is also the author of the firms two websites, The Employment Law Solicitors and The Compromise Agreement Solicitors. Visit the websites at: http://www.theemploymentlawsolicitors.co.uk and http://www.thecompromiseagreementsolicitors.co.uk