Understanding Compromise Agreements

It is worth remembering that although we get up each day and go to work, there may come a time when the unthinkable happens and you lose that job and the security that goes with it.  Most employees can only hope that this will not happen, but in the current financial climate where jobs are hard to come by and employment itself is as tenuous as it has ever been, it is in our best interests to know our rights as employees.

When an employer and employee part company in a way that is considered to be either unfair or a breach of contract, then there is an opportunity for the employee to fight their case and get due compensation from the employer.  This can be a lengthy legal process, as well as a difficult and painful one too. You are not only fighting for your job but also your security and perhaps your identity.  The process of resolving disputes can be a very unsettling time but there is help at hand - this help comes in the form a compromise agreement.

Let’s look at what a compromise agreement is and then see how it can be implemented to ensure that you as the employee stand every chance of recovering the best possible settlement from your employer.
 
The compromise agreement was created by Parliament in 1993. It is a document that is used to record an employee’s agreement with their employer. It states that they will not pursue an unemployment related claim against the employer, such as unfair dismissal or breach of contract.  In return it is common place for the employer to offer the employee a sum of money.

So essentially, it is a way in which both the employer and employee can resolve an issue without bringing a lengthy and damaging legal situation to the fore.  The important part of the compromise agreement for the employee is that they feel that the sum of money they are offered is proportional to the amount of lost earnings they are likely to incur.

The compromise agreement is now an established part of employment law. As such there are of course a number of mandatory requirements that must be met in order for the compromise agreement to be valid.  

The first of these is that the agreement must be made in writing and the agreement should pertain to a particular and specific complaint that has been made by the employee against the employer.  It is imperative that the employee who has been offered the compromise agreement has received legal advice from a qualified and appropriately insured solicitor. This ensures that the employee goes into the compromise agreement with their eyes wide open.  

Finally the employee’s compromise agreement must be tailored to the employee’s particular situation. It should be drafted in such a way as to settle the employee’s particular claim against the employer.  

This all makes the compromise agreement a very useful device for both employer and employee.