What are compromise agreements ?
A compromise agreement is a legally binding agreement to accept compensation from an employer instead of pursuing your case to an employment tribunal. Compromise agreements were originally designed for resolving disputes between employers and employees and usually involved the withdrawal of a tribunal complaint in return for a compensation payment. However, employers are now increasingly using compromise agreements as a mechanism for preventing possible future complaints to tribunal in redundancy situations.
They are a legally binding agreement, recognised in the Employment Rights Act 1996 setting out the basis of the severance payment you are receiving, in return for which you agree not to take your employer to a Tribunal. The document needs to be explained to you by an independent solicitor and that solicitor needs to warrant in the agreement that you have received the appropriate advice. Many companies use compromise agreements as a way of setting out the formal arrangements of the termination of your employment.
