A compromise agreement is used when you reach a full and final settlement with your employer.
You might be offered a compromise agreement because you’ve been made redundant, or because you brought a claim against your employer due to breach of contract, discrimination or unfair dismissal.
In return for your employer giving you money (and sometimes other benefits), you give up your right to take them to court or the employment tribunal.
Here are some of the key things you need to know about compromise agreements…
It’s legally binding
A compromise agreement is legally binding – it can never be revoked or overturned. This means you must ensure you’re 100% satisfied before you sign, and you can’t change your mind later.
You must take independent advice
Because of that, you are required by law to take independent legal advice from a specialist lawyer who has the appropriate insurance. Someone like us, for example (hint, hint!).
We give advice about compromise agreements all the time – in fact, it’s one of the main services we provide.
Your employer will probably pay
Importantly, you probably won’t have to pay for the legal advice you receive, as the employer usually covers our fee.
Before we start work, we’ll advise the fee limit and clarify who pays for what.
Don’t worry. As qualified solicitors, we are genuinely independent and impartial. Our duty of care is to our client, no matter who pays the bill – that means we’re on your side.
What’s included
Your compromise agreement will set out the terms of your settlement in writing. Every case is different, but here are some of the terms it might include:
- Compensation you will receive
- Date you will be paid
- Tax implications
- Whether you must keep the agreement a secret
- Whether the employer will give you a reference
- Whether you will be bound by restrictive covenants such as being forbidden to work for a competitor for a certain period of time
What’s in a name?
A compromise agreement is known as a settlement agreement in the rest of the UK. They’re the same thing, and you’ll find lots of advice on our blog that applies to both.
Need help?
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We have already helped thousands of people to win millions of pounds in compensation.
You have a choice of ways to pay, including ‘no win, no fee’.