Compromise agreement or settlement agreements as they are now called. If the two parties to a contract of employment reach a point where continuing to work becomes untenable. Something has to be done. If terms can be agreed between the employer and the employee, then a compromise agreement can be the best way forward.
A Statutory Instrument
A compromise agreement is a “statutory instrument”, this means, as a legal document it that waives rights granted by parliament. It must be correctly drafted, and must be counter signed by a solicitor or other qualified person, that the terms and effects of the document have been explained to the employee. It is also a requirement that the employer pays the fee of the qualified persons’ advice.
Two Essential Componants
As a compromise agreement it needs two essential componants, offer….and…… consideration. In essence the employer offers a financial settlement to the employee, and the employee, for their part, accepts the payment and waives their right to sue the employer under the terms of the termination of the contract of employment. The employee gets a windfall, and the employer need not have a tribunal claim lingering in the background…….peace of mind for all.
Avoid the Pitfalls
As in all things legal, there are pitfalls. One such is that, the employer should not be the one to float or propose the idea of a compromise agreement. Employees, if they choose not to accept the terms, could use this offer as evidence that the employer is trying to get rid of them, and could claim constructive dismissal ! So Beware! Better, to allow the employee to make the proposal, then the employer can merely respond to the request .
How Much Will It Cost?
As to the amount, this is an agreement to agree, there are no set parameters as to amount, it’s down to whatever the parties agree on. So you must take professional advice. see this link from the CAB read more
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