Compromise Agreements : Their purpose

In summary, Compromise Agreements are all about achieving a clean break between employer and employee. For employers, the reassurance that there will be no future claims. And for employees, usually a good financial incentive to agree to this. But there is frequently more to it than meets the eye, especially when the employee may never have had to see a solicitor before. That's why there's no substitute for good practical and timely advice. To put it another way, "never compromise on a Compromise Agreement".

Compromise Agreements : The Basics

So you’re being asked to sign a Compromise Agreement. You may already have the proposed Compromise Agreement in anticipation of settlement being reached. What are you going to be concerned about, knowing the likely contents?

Termination Date
Plain common sense – you’ll want to be sure when your entitlement to salary comes to an end, whether you’re working your notice or on garden leave.

The Payment
You may have agreed this in advance. You may be seeing the figure for the first time in the Compromise Agreement. Is it something to accept with alacrity, or should you be negotiating for more? Or is a tribunal claim going to be the only sensible option after all?

Tax Treatment
Sometimes the promised tax free lump sum can be taken as read. But not always. Larger severance packages and tricky notice clauses may need closer examination.

Return Of Company Property
Not always just a physical handover of keys and tools. What if you have had electronic access to confidential documents – how stringent are the conditions against future misuse, academic as this might seem?

Confidentiality
Few employers would want to risk exposure to loose talk in the pub about termination packages. What would be the downside of careless or derogatory comments?

References
Will you be provided with one, and what will it say?

What Types Of Claim Are Being Settled?
Important to know how far this extends, especially if the background has been focused on a narrow issue.

Independent Advice And Costs
You need the independent advice that the terms are fair and reasonable. The law says so. Is there a reasonable contribution covering most if not all of the costs involved?

It’s all familiar ground for us. We can help you understand what’s involved and ensure that it’s fair and reasonable for you to sign up.

Compromise Agreements : Complicated backgrounds

If the background to your proposed Compromise Agreement is more complicated, you may be faced with the need to address matters such as: -

1. Whether any post-termination restrictions are being revised or introduced;

2. Whether they are legally valid anyway;

3. Deferred return of a company car;

4. Loss of directorships or share options;

5. “Anti-windfall” clauses – what if you’re sitting on a new job offer?

We have wide experience of executive contracts and their termination. The principles may be broadly similar but there’s every advantage in knowing what you’re letting yourself in for with the help of some careful guidance.

Contact: David Cooper

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