Louise Greer Solicitor Law Society Quality Scheme member Helping you make the right move

Redundancy and Compromise Agreements

Dealing with the detail of financial compensation, competition agreements, references etc with an employer can be stressful at the best of times, when losing your job it can be a nightmare - we are here to help.

Employers and employees who would prefer to resolve a matter without proceeding to a Tribunal but recognise that the employment relationship has come or is coming to an end can enter into a Compromise Agreement. This usually saves time and costs for both parties.

The employer is not required to follow the relevant procedures and, even where those procedures have been followed, is not still faced with the prospect of a Tribunal claim. The employee receives an agreed sum of money under the agreement, which can often be paid tax free, in return for agreeing not to bring a claim. The employee may also be able to agree the wording for a reference, and does not face the prospect of waiting months for a Tribunal hearing or paying solicitors at a time when they may be out of work and can ill afford to do so.

Presenting an employee with a Compromise Agreement may in itself constitute a Constructive Dismissal so derisory settlement offers contained in Compromise Agreements may well do an employer more harm than good if the employee rejects the offer and proceeds to an Employment Tribunal. The parties must agree on the terms of settlement which may involve some negotiation on both sides. To be valid there are certain specific legalities relating to the format of the agreement.

Most employers will have the agreement drawn up by an employment lawyer. The agreement must be in writing, and must specify the particular complaint which the employee is agreeing to compromise. The employee must have received independent advice from a person qualified and insured to give that advice (invariably their own appointed solicitor) as to the terms and effect of the proposed agreement. The agreement must identify who the adviser is and it is usual for the employer to pay some or all of the costs involved in taking this advice. Finally the agreement must state that the conditions regulating compromise agreements are satisfied.

Please telephone us for further information on the service we can provide to help you through this difficult time.

Please visit this government website link to calculate your statutory redundancy payment