Employment Law Solicitor

For more information contact
Sarah Cruice
0114 253 6547 | email Sarah
View Sarah's profile

Ironmonger Curtis LLP
Registered office:
Edmund House,
233 Edmund Road,
Sheffield,
S2 4EL

0845 225 2635
0114 253 6559
info@ironmongercurtis.com

VAT number 852641622

Ironmonger Curtis LLP
SRA number 417712
Authorised and regulated by the
Solicitors Regulation Authority
Partnership number: OC310963
Members: Trevor Ironmonger, Jonathan Curtis, Simon Smith

Compromise agreements

A “compromise agreement” is a written agreement between an employer and an employee where the employer gives some incentive – normally money – in return for the employee waiving his or her right to bring employment law claims against the employer.

A compromise agreement is usually offered in one of the following circumstances:

Where an employment tribunal is imminent or threatened, and the parties agree a deal;
Where an employee is dismissed for a “fair” reason – such as redundancy – but the employer wants to be absolutely sure that the employee is not going to bring a claim; or
Where an employer decides – for whatever reason – that they no longer wish to work with an employee but do not wish to follow the normal employment law procedures for dismissal.

A compromise agreement must comply with certain requirements in terms of its form and content if it is to be legally valid.

One of the key requirements of a valid and enforceable compromise agreement is that the employee must seek independent legal advice as to the terms and effect of the agreement prior to signing it. This is to make sure that the employee is aware of the consequences of signing the agreement and is able to balance that against the merit and potential value of any claims they may have and make an informed decision as to whether to go ahead.

Compromise agreements normally contain a number of “standard” provisions (but using different wording) for instance:

The employee is often required to indemnify the employer against any tax risk;
Confidentiality as to the terms of the agreement itself and / or any confidential information arising out of the employment itself;
The “waiver” clause will normally set out a long list of potential claims that the employee may have;
A clause requiring one or more of the parties not to speak detrimentally about the other party;
Typically the employer will agree a sum of money towards the legal fees of the employee;
A declaration for the employee’s solicitor to sign to confirm that the employee has been independently advised;
Confirmation that various statutory requirements have been complied with;
Terms relating to payment of the money;
A reference clause stating that the employer will respond to reference requests from potential new employers of the employee in accordance with agreed wording;
Compromise agreements often refer to “ex gratia” payments. These are payments which are gratuitous and can sometimes be paid gross without the deduction of tax;
A repayment clause if, despite the agreement, the employee brings a claim; and
A warranty that the employee has not previously acted in breach of contract.

If you are an employer and would like to know more about compromise agreements, or if you would like us to draft a compromise agreement on your behalf, please give Sarah Cruice, employment solicitor, a call on 0114 253 6547 or email her at sarah.cruice@ironmongercurtis.com. Sarah will happily talk any situation through with you.

If you are an employee and your employer has asked you to sign a compromise agreement, you will need to take legal advice before signing it. We are experienced in providing this advice efficiently and comprehensively. Please contact us on 0114 253 6559 and we will be happy to discuss your situation with you.