Compromise Agreements

What are compromise agreements?

It is advisable when looking to settle an employment dispute to exclude, as far as possible, any  claims by the employee against the employer in return for a settlement. To achieve this effectively such a settlement should be in the form of  a compromise agreement and great care should be taken in drafting such an agreement. For a compromise agreement to be binding it must comply with certain conditions:

  1. It must be in writing, identify the adviser, relate to the particular complaint and state that relevant statutory conditions are satisfied
  2. The employee or worker must have received advice from a relevant independent adviser as to the terms and effect of the proposed agreement and, in particular, its effect on his/her ability to pursue their rights before an employment tribunal
  3. There must be in force, when the adviser gives the advice, a contract of insurance, or an indemnity provided for members of a profession or professional body, covering the risk of a claim by the employee or worker in respect of loss arising in consequence of the advice

Why use Healys?

We will advise you on the structure of the agreement and any compensation payable so as to maximise any savings that can be made (including potential tax savings in respect of termination payments) and to ensure the agreement best protects you, the employer,

What are the likely costs?

It is usual for an Employer to make a contribution towards an Employee's fees for seeking independent legal advice on the terms of the compromise agreement. This is covered off in the agreement and the payment of costs should not normally be regarded as a taxable benefit for the employee.  

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Nick Evans
T: 020 7822 4141 (DDI)

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Julia Stirling
Consultant Solicitor
T: 020 7822 4101 (DDI)