The Employment Compromise Agreement

An employment compromise agreement is a legal and binding agreement between an employee and an employer following the latter’s employment termination. Under the terms of the deal, the employee would receive a specified and usually hefty amount of cash as a form of severance pay. S/He, in return, agrees to drop any legal claims or cases that could be filed before the Employment Tribunal.

As an employment tool, employers use an employment compromise agreement as a shield against unlikely instances and claims specifically during redundancy situations. For their part, employers should comply with specific legal requirements especially when making any redundancy. If the employer fails to deliver the requirements, a claim could be filed by the employee before the employment tribunal. Any claim awarded to an employee by the tribunal would significantly cost the employer, thus, it is very rare for any employer to fail meeting requirements in an employment compromise agreement.

For any employment compromise agreement to be valid, the following simple requirements must be met: the agreement should be in writing; it should identify an adviser; it should relate to particular complaints held by the employees; all the requisite conditions should be met; the adviser should carry a professional indemnity insurance; and the employee must have received appropriate legal guidance and advice from an independent employment solicitor before he signed the contract. The solicitor is even made a signatory of the document as a proof that legal advice was appropriately provided to the employee prior to signing the agreement.

What are the logical benefits of such agreement? First, certainty is provided for both the employee and the employer. The employee would know the exact amount he would receive from the deal, while the employer may rest assured that no legal claim would be filed by the employee against the business. Second, a hefty amount of money is paid to the employee as a form of compensation for the job loss. The amount involved is usually higher than a redundancy or dismissal package. Lastly, the employment compromise agreement minimizes risks of possible problems related to employment.

An employee is not obliged to sign this agreement. He has the option whether to accept the deal or not. However, in a redundancy situation, refusal to sign the agreement may result to a lesser amount of settlement. The package that comes with a compromise agreement is usually much higher than a statutory redundancy entitlement.

The employee is required to hire an employment solicitor for the matter. Solicitors are qualified to give legal advice to employees who are considering an employment compromise agreement. The law specialist should clearly explain to the employee all the legal terms and technicalities of the document. The employee must fully understand every term and clause included in the employment compromise agreement.

The payment involved should be made in about seven to 14 days following the formal signing of the employment compromise agreement. As for the cost of the legal advice, the employer has the responsibility to shoulder all expenses that come with the drafting and signing of the agreement.

Leave a Reply