A compromise agreement is a legally binding agreement that sets out the terms upon which your employment with your current employer is to be terminated.

Under UK employment law, any employee who has been asked to sign a compromise agreement is required to seek advice from an employment law solicitor or other expert in order for the agreement to be legally binding.

Compromise agreements have seen a notable increase in usage over the past 18 months, particularly as the recession has set in and employers have been seeking to make large scale job cuts as quickly and efficiently as possible. Compromise agreements are also becoming a more popular option as employers try to minimise the risk of any claim being brought against them. This is because by signing a compromise agreement, employees waive their right to bring their employer to an Employment Tribunal at a later date for any matter relating to their dismissal.

If you have been issued with a compromise agreement, the most important thing to remember is that by signing such an agreement, you legally accept the terms of the settlement and are prevented from bringing a claim against your former employer that could result in an Employment Tribunal.

Therefore, if you feel that you have been unfairly dismissed, have been discriminated against at work, or that the severance package that is being offered to you is not accurate, fair or reasonable, you may not wish to sign the agreement. An employment law solicitor will be able to advise you as to the best way to proceed at this stage and will be able to negotiate the terms of the agreement on your behalf where necessary.

When you are issued with a compromise agreement, your employer may provide an accompanying list of solicitors for you to contact. It is important to remember the advisors in this list may have been recommended on a cost basis rather than expertise, (employers who are laying off large numbers of staff can often negotiate a reduced, fixed price deal with a solicitor to review compromise agreements on behalf of employees).

A specialist employment law solicitor, due to their knowledge and specific experience with compromise agreements, is likely to be better placed to advise you. For your peace of mind, seeking advice from an impartial solicitor may be the preferable way forward. Your employer is still likely to provide a substantial contribution to the fee for consulting a solicitor who is not on the list provided. ]

If you would like any further advice on compromise agreements, or indeed any other aspect of employment law, please do not hesitate to contact me.