Agreements A Preliminary Note to
This is a preliminary advice note
and is not a substitute for taking detailed legal advice in relation to your
situation, which may be legally complicated.
Compromise agreements are a
relatively common way of ending an employment relationship. Under the terms of the Agreement the employee
receives a lump sum payment and the agrees to accept the money in settlement of
all claims past, present or future which the employee has or may possess as
against the employer, any group company or any officer or staff member.
For an employee, it is important
to obtain best advice if such agreement is presented to yourself to sign from your
The role of the legal adviser is
not just to witness your signature, but to provide detailed advice to an
employee as to their legal position, and indeed whether the employee should
accept the monetary offer made by the employer under the terms of the Agreement
and to discuss other options available.
The legal adviser will also
consider amendments which should be made to the wording of draft agreement.
These agreements are usually drafted very favourably towards the employer, and
need to be amended to redress the balance, and to protect the employee’s
It is not uncommon for the
employer to offer a contribution towards the employee’s legal costs under the
terms of the Agreement.
In our experience such costs
contribution is negotiable, and the amount will usually be required to be
increased. This is primarily because the amount of costs offered usually only
provide for the signing off the agreement without any amendment. This is of
course deliberate on the part of employers, since they do not wish their draft
agreements to be amended.
Some of the terms of draft
agreements are very onerous, such as an obligation upon the employee to repay
the whole of the compromise money if they breach (however minor) their
obligations under the Agreement. Such obligations usually include warranties
that the employee has never been in breach of their employment agreement (which
would include arriving for work late), or will not disclose the terms or even
the existence of the compromise agreement to any third parties.
It can therefore be appreciated
why amendments are usually recommended.
Employees should be wary about
legal advisers who do not suggest any amendments or any serious amendments to
the terms of the draft agreement and who are prepared to rely entirely upon the
costs contribution to be paid by the employer.
Sometimes we advise clients not
to accept the monetary offer on the table.
It is in fact not uncommon for
the amounts offered by employers under compromise agreements to be inadequate.
One notable example comes from a
client of ours who was offered £8,000 from an employer under a compromise
agreement. We could not recommend the
client to sign off the agreement and following the making of a Tribunal claim,
settlement with the Employer was agreed in the sum of £25,000.
It is also not uncommon for
employees to have the benefit of legal expense insurance cover in order to
bring Tribunal claims. This is a common add-on to home contents insurance
policies. Alternatively, where there is
no legal expenses cover, in the case of a reasonably strong claim then we would
be prepared in conjunction with a barrister to enter into no-win, no-fee
However, upon the basis that the employee
is willing to accept the money on the table then it is necessary to run through
with the employee each of the paragraphs of the compromise agreement making
amendments where necessary or instructed to do so.
Compromise agreements are
generally extremely onerous and in a perfect world we will normally only
recommend the employee to sign after implementing reasonable changes.
Legal costs will depend upon the
amount of work involved and whether the employee feels that they can live with
the Agreement in its amended state or whether we should push to secure further
Compromise Agreements represent a
core area of the work of this firm.
We offer an initial fixed fee
interview of half an hour at a cost of £75 plus VAT. We are pleased to undertake this by way of a
telephone conference is this should be more convenient.
If you would wish this firm to
assist please contact Lawrence Rodkin (partner).