FAQs about Compromise Agreements

Havering Compromise Agreement FAQs

What is the point of offering an employee a compromise agreement ?

Compromise agreements are designed to be mutually beneficial for both the employer and the employee.  The agreement also creates certainty and finalises relations between the parties.  The employee is usually free to seek work immediately.  The employer will protect itself from the majority of employment law claims that can be pursued at an employment tribunal, saving considerable time and money (especially given the fact that employers cannot recover costs at tribunals).

What claims can I restrict the employee from pursuing at an employment tribunal?

Many employment law related claims can be restricted.  However, by law you will not be allowed to restrict the employee from pursuing claims for personal injury.  Restrictions on claims regarding diseases which take a long time to appear, such as asbestosis, are not allowed by law either.

Should I include a confidentiality clause in the compromise agreement I offer?

A confidentiality clause is often used to mutually and legally bind both parties to an obligation to not reveal the existence of the agreement to non-concerned parties.  Alternatively, whilst revelations about the very existence of the agreement may be allowed, reference to the actual terms may not.

Why include a confidentiality agreement?

One reason for having a compromise agreement is to avoid employment related disputes going to an employment tribunal, which are usually open to the public.  Including a confidentiality agreement finalises the matter and prevents any attention being drawn to any issue the that agreement has been used for in the first place.

When should I offer an employee a compromise agreement?

It is common to offer an employee a compromise agreement when they have a fairly strong legal claim against you.  They can be used for redundancies, employees who wish to not return to work after taking maternity leave, employees who are too unwell to continue working and other types of circumstances.  Naturally, it is obviously inappropriate to offer an employee a compromise agreement where they have been summarily dismissed for gross misconduct, although you should remember to tread carefully when making any dismissal.

Why does an employee need to see a solicitor?

An employee needs to see a solicitor for a compromise agreement to be legally binding.  If the employee does not receive independent legal advice on the agreement, then you or the employee will not be able to rely on it in the event of a dispute or court hearing.  Advice can also be given by trade union officials who have been certified and advisers working in centres such as the Citizen’s Advice Bureau.

Will I have to pay the employees legal costs?

As part of a compromise agreement, it is expected that the employer will pay or contribute to the employee’s legal costs for receiving advice on the agreement.

How much should I contribute?

It depends on the agreement, but employers will usually contribute around £300 to £600 for the employee’s legal costs.

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