Solicitor Brighton

ADVICE FOR EMPLOYERS IN BRIGHTON ON EMPLOYMENT LAW & COMPROMISE AGREEMENTS

Benefits of a Compromise Agreement for employers

• certainty, as opposed to the risk of defending a claim
• saving management time
• Avoiding any adverse publicity, both internally and externally
• minimising the involvement of other employees in any dispute which can adversely affect morale, loyalty and commitment
• reduction of potential legal costs defending claims

Compromise Agreements can be useful, in appropriate circumstances, for ending an employment relationship. If one is signed, it does not amount to a dismissal by the employer but rather a mutual termination of the employ

How we can help

• In assessing the circumstances, legal risks and commercial cost/benefit of whether a compromise agreement is the best solution for the particular issue
• negotiating with the employee’s Representative and/or ACAS to broker the agreement on your behalf
• drafting a suitable compromise agreement to fully protect the employer against future claims and to incorporate any other relevant terms such as restrictive covenants

Content of a Compromise Agreement

A compromise agreement  generally provides :-

• If redundancy, a full breakdown of redundancy pay entitlement
• Ex gratia compensation for loss of office – generally tax free up to £30,000.00
• Notice payment – taxable
• Other contractual entitlements – holiday pay, possibly medical cover, bonus, commission -taxable
• Possible payment for restating restrictive covenants

Without prejudice negotiations

It is worth remembering that an employee can turn down a Compromise Agreement. Consequently, it is important to avoid situations where the employee may seek to argue that they were given no choice but to sign the Compromise Agreement as their dismissal was a foregone conclusion. Care needs to be taken that any negotiations are clearly without prejudice meaning that they are immune from court or Tribunal knowledge, and it is important to continue with ongoing alternative on the record activity even if a compromise agreement is being offered, such as performance review, disciplinary hearing or a redundancy procedure.