What Is A Compromise Agreement

When the relationship between an employer and employee sours to the point that there is a break down of an employer-employee relationship, an earliest recourse for either party might be to terminate the employment altogether. That is either by a termination by the employer or resignation by the employee.

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Both parties can enter into a compromise agreement, which would identify the terms surrounding the departure and add more structure and certainty to the situation.
What are the legal implications of signing?

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The most important thing to be aware of is that once you have signed a compromise agreement, you are accepting the terms in full and final settlement and are waiving your rights to bring an employment related claim against your (former) employer in the employment tribunal.

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It is a legal requirement that you see a lawyer under s.203 Employment Rights Act 2006, in order to explain the terms and effect of the agreement. It is deemed necessary as you are “compromising” a number of your rights by signing the agreement. You must have the compromise agreement explained by an independent solicitor before the agreement becomes binding. The solicitor giving the advice must also sign the agreement and certify that the appropriate advice has been given.

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For further information about drawing up a compromise agreement and more information about such agreements call our employment law team on (0116) 2999199