Compromise Agreements

 

 

On the termination or proposed termination of an employee’s contract of employment, two competing questions arise:-

 

The Employee: “The company is getting rid of me. Do I have a claim against the company?”

The Employer: “ How can we ensure that when we terminate a contract of employment, the employee does not turn round and sue us?”

As with so many competing positions, a compromise solution is generally achievable. Thus, the compromise agreement is an agreement between an employer and an (ex-)employee whereby the employer effectively buys the agreement of the employee that he or she will not bring a claim against the company.

 

The law and public policy has quite properly concluded that compromise agreements whereby employees sign away their employment rights are not enforceable unless certain requirements are met – most importantly that the employee must receive expert advice on the claims that he or she may be giving up.

 

Compromise agreements must be properly drafted written agreements signed by both parties and by the employee’s adviser.

 

 

From the employee’s perspective it is necessary to identify any potential claims that may exist (eg. Unfair dismissal, sex discrimination, unfair deductions from salary etc) and where possible to assess the potential value of such claims. It is only once this exercise has been undertaken that it is possible to come to a sensible conclusion as to whether the settlement offer being put forward by the employer is worth accepting or whether bringing a claim is likely to be the more profitable option.

 

 

From the employer’s perspective it is necessary to identify where the risks of a claim may lie and the assess the potential liability of the company before arriving at an appropriate figure to offer to the employee.

 

 

At Rochman Landau we are able to assist in negotiating compromise agreements for all employees at all levels of seniority on behalf of both employees and employers. We are experienced in dealing with compromise agreements ranging from relatively routine settlements to complex, structured settlements running into many hundreds of thousands of pounds.

 

For further information on compromise agreements, please contact Daniel Oakland on 020 7544 2424 or by e-mail at danielo@rochmanlandau.co.uk