Liverpool Solicitors

EMPLOYMENT LAW SOLICITOR IN LIVERPOOL – COMPROMISE AGREEMENT FAQS

Compromise Agreements FAQs

What is a compromise agreement?

Compromise agreements are agreements that you can make with your employer regarding a variety of issues following the termination of your employment.  The agreement will be a mutual one; usually in the form of a standard document and make arrangements for severance pay.  In return for the severance pay, you forfeit your right to pursue further legal claims against your employer. Common issues that are covered by compromise agreements include:

• Redundancy
• Grievances
• Where employees are medically unfit to work
• Where employees do not wish to return to work after maternity/paternity leave
• Where inadequate notice has been given by the employer to terminate your employment

What is usually contained in a compromise agreement?

It depends on what the issue is and the nature of the agreement you and your employer come to.  If, for example, you have been made redundant, your redundancy pay will be covered, specifically with regards to the amount and how it is paid.  If you have been given inadequate notice, the agreement should specify the payment of a sum in-lieu of the required notice.

Other issues that may be covered include confidentiality.  You may have to agree not to reveal trade secrets within a certain period of time and agreement itself may be a confidential one.

Employers will also have to consider their duties under the Race Discrimination Act, Sex Discrimination Act and Employment Rights Act in order to make the agreement legally binding.  This legislation will be covered within the agreement to ensure the employers have discharged their duties.

How much will I get?

Again, it depends on the issue, surrounding circumstances and how negotiable the agreement is.   An important point to consider is whether the payments will be made tax free (something which the agreement should state).  Usually sums up £30,000 will not be subject to a tax deduction.

When will I receive the payments?

It depends on what has been agreed, but usually within a week or a fortnight or next company pay run.

Why do I need a solicitor?

As I am sure you are aware by now, the law is not the most accessible of subjects and particularly so where statute law comes into play.  Compromise agreements being subject to statute law can therefore be difficult to read and understand, with words apparently written in plain English taking on a different legal meaning altogether.

Even more important is the fact that for a compromise agreement to be legally binding, it is a legal requirement that the employee seeks legal advice in order to make sure the agreement and the consequences of it have been properly understood.

Who can I get legal advice from?

Under the Employment Rights (Dispute Resolution) Act 1998, the people qualified to advise on compromise agreements are a qualified solicitor, trade union representative or centre worker.   In addition, they have to be covered by indemnity insurance to ensure that you are properly compensated for any negligent advice you might receive.

Although we do not like to promote ourselves within a FAQ section, solicitors are usually best placed to negotiate the best deal for you and ensure that all the legal consequences of the agreement have been properly understood.

How much will the legal advice cost?

In relation to giving you basic advice as to the consequences of the agreement and, if appropriate, having it reworded, there should be no cost involved in the vast majority of cases as your employer will agree to foot the bill for you.

I’m not happy with my agreement.  What should I do?

The first thing to realise is you are not legally bound to actually sign the agreement, so don’t sign it!  If you sign the document, it is legally binding and you have sought the appropriate legal advice, you will be locked into that agreement and there will be little you can do about it.

You have a few options.  You could reject the agreement altogether and take the case to an employment tribunal, as long as you do this within three months of the termination of your employment.  However, if your employer has agreed to give you a redundancy package more than required by statutory law, you might have to settle for a lower amount than what you agreed to.

You could take less drastic measures by seeking legal advice and using a legal representative to negotiate a better deal for you.  The majority of compromise agreements are negotiable, so if you are not happy with your agreement, it is certainly worth a try.