Do I have to sign a compromise agreement?

by Direct 2 Lawyers on December 3, 2012

If you’ve been offered a compromise agreement then you’ll need to get specialist legal advice from an independent relevant legal adviser (such as a compromise agreement solicitor). If you don’t then the compromise agreement will not be valid. However, you will probably want to (and it’s certainly a good idea to) educate yourself on what compromise agreements are and whether you have to sign one prior to agreeing to what you’re being offered. We’ll therefore have a look at these issues below, addressing the following points:

  1. What is a compromise agreement?
  2. When are compromise agreements normally offered?
  3. Do you have to sign a compromise agreement?

What is a compromise agreement?

A compromise agreement is a specific type of agreement – regulated by statute – between an employer and an (ex-)employee under which the employee waives their right to pursue certain claims in return for a sum of money or some other equivalent benefit (such as, for example, the continuing of their contractual right to a company car or medical insurance etc.).

When are compromise agreements normally offered?

Compromise agreements are normally entered into in the following situations:

  1. Redundancy situations – where the employer is making an employee redundant but wants to preclude the possibility of the employee making an unfair dismissal claim against them
  2. Employment Tribunal claims – where the employee has already issued or is threatening to issue Employment Tribunal proceedings
  3. Breakdowns in mutual trust and confidence between the parties – where neither the employee or employer trust each other there may have been a breach of contract (potentially leading to a claim in the Employment Tribunal for breach of contract or constructive dismissal)
  4. The end of a fixed-term contract

Do you have to sign a compromise agreement?

The simple answer is “no” – there’s no absolute obligation to sign a compromise agreement. A better question for you to answer is: “should I sign the compromise agreement?” or, alternatively, “does the compromise agreement accurately reflect the value of my potential claims against my employer?”. This is a tricky question and one that can’t really be answered in a simple blog post – whether you should sign the agreement depends upon the particular facts of your matter, the prospects of success of your claim and how strongly you feel about your claim (among other things). The recommended thing to do is to contact an expert compromise agreement solicitor to determine a number of things, including:

  • The nature of your claim
  • What the prospects of success are in your claim; and
  • The value of your claim

Direct 2 Lawyers offer employment law advice to employees and employment law advice to employers

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