Compromise Agreements

It is likely that if an employee is being dismissed or he or she has reached an agreement regarding the termination of his or her employment that the employee will be asked by the employer to sign a compromise agreement.

Compromise agreements allow parties to settle employment disputes as long as certain statutory conditions are met. For example, if the compromise agreement is to be effective, the employee must have received advice from a independent adviser as to the terms and effect of the proposed agreement and, its effect on his or her ability to pursue his or her rights before an employment tribunal.

Oxford Employment Law Solicitors, have substantial and extensive experience in this area of law, having advised many hundreds of executives and employees as to the terms and effect of their compromise agreements.

What terms might a compromise agreement include?

Apart from fulfilling the relevant statutory conditions, a compromise agreement may contain, for example, any or all of the following:

• Settlement package (including date of payment, which is commonly 7 or 14 days after signature).
* A list of claims being settled and warranty that the employee has no statutory claims other than those settled.
• The employee's undertaking not to litigate (and a provision requiring repayment of the settlement payment if this is breached).
* A tax indemnity. The first £30,000 of many termination payments is tax exempt. Nevertheless cautious employers may require the employee to indemnify them in the event that they incur tax liability.
• A reminder of any restrictive covenants or confidentiality obligations in the contract of employment that will still bind the employee following termination. If the employee is asked to enter into fresh restrictive covenants or confidentiality obligations in the settlement agreement, separate consideration should be given .
• mutual undertaking to keep the terms of the compromise agreement and the circumstances leading up to the employee's departure confidential
agreed reference.