Is there a standard or typical financial offer for a Compromise agreement?
This is a very commonly asked question. Whilst each case depends to a degree on the underlying circumstances, in terms of relationship between the parties, length of service, possible underlying claims and other factors, there is something of a “going rate” for the ex gratia offer made by an employer. In our experience, a typical compromise agreement will offer: • the equivalent of somewhere between 2-4 months salary, paid gross, as an ex gratia inducement to the employee, and • the employee’s contractual notice period (generally paid net of tax – please see below) and • any other contractual entitlements such as untaken holiday pay. There are technical and tactical reasons why an Employer may not be prepared to offer, ex gratia, more than around the equivalent of an extra 4 months’ salary. Please ask us if you would like a more detailed explanation.
