What is a compromise agreement?

If your employer has offered you a compromise agreement, otherwise known as a settlement agreement, you may be feeling a range of emotions – shocked about being asked to leave your role, nervous at the prospect of facing unemployment and concerned about your financial security.

You may have lots of questions and will need the help of a friendly, experienced employment law expert. We can explain the terms and effect of the settlement or compromise agreement, remove any confusion and ensure that you are happy with the proposed package.

Often we negotiate a better deal than is being offered. We may be able to improve the compensation you will receive, and negotiate other terms such as confidentiality. Perhaps you are worried about a future reference, or about negative comments being made about you after you have left? Let us help. 

Below are some of the most common questions which we are often asked by people in similar situations to you:

What is a settlement agreement?

A settlement agreement, formerly known as a compromise agreement, is a legal contract between an employer and an employee. It is a no-blame way of ending your employment which usually involves you receiving financial compensation.

The settlement agreement brings an end to any potential and on-going claims against your employer. You will not be able to make a claim to a civil court or an employment tribunal for compensation in the future.

What kind of situations are settlement agreements used for?

A recent survey found that nearly 40% are used by employers to remove an employee who is underperforming or on the grounds of misconduct. Around 25% are used in redundancy situations, and a similar number are used for the discrete removal of senior staff.

Who pays for the cost of the settlement agreement?

Generally, your employer will pay the cost of you obtaining legal advice. Although this isn’t required by law, it is in the interests of your employer to ensure that all formalities are adhered to, and the best way of doing that is by meeting your costs.

Can my employer insist on confidentiality within the settlement agreement?

Yes, they can. Often when a financial settlement has been made you must agree not to disclose the sum that has been decided. Other confidentiality requirements may be imposed.

It’s important to understand that if you breach the agreement then your employer has the right to sue you for compensation.

Why should I choose QualitySolicitors?

For a settlement agreement to be valid, you must receive independent legal advice. Talking to the right legal expert can make all the difference in the outcome of your situation.

We will be able to take the stress out of this difficult time for you by explaining what claims you are compromising and what the settlement agreement really means. 

If you want us to negotiate on your behalf we may be able to help you receive adequate compensation, a reference to help you get a new job, and improve other terms. For example, it might be important to  prevent your employer making negative comments in the future about  your performance or you as an individual.

We’ll be on hand to support you in leaving your employment on the best terms possible and with dignity, enabling you to feel free to move on with your life confidently.

You can find your nearest QualitySolicitors specialist here.