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UK Employment Law\ Employer \ Compromise Agreements
Compromise agreements for unfair dismissal and redundancy
One way to settle an employment matter is by making a compromise agreement. Such a contract between employer and employee is deemed to be in full and final settlement.
An effective compromise agreement must be written and do the following:
- It must be drafted in direct relation to the particular complaint;
- The employee must receive independent legal advice from a qualified employment solicitor, an officer of an independent trades union, or an advice centre worker. Such a person must have an insurance policy covering them should the employee lose out in the agreement. The advisor would ensure the terms and effect of the proposal are legally enforceable. They would also ensure the employee’s ability to pursue any appropriate rights at a tribunal.
- The adviser who gives the advice must have an insurance policy covering the risk of a claim by the employee for an alleged loss arising out of the advice;
- The advisor must be identified in the agreement;
- The final compromise agreement must declare that all of the conditions are satisfied.
If an employer fails to take this route, then the employee would be able to take proceedings, even if a compensation payment had been made. If that employee then takes proceedings, any such payment can be taken into account when making a compensation assessment. On the other hand, if the claim only relates to wrongful dismissal, the employer and employee can settle by agreement. In this case there would not be any need for special requirements to be satisfied.
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