What are Compromise Agreements?
A compromise agreement is a contract between employer and employee. The employee receives a compensatory payment in exchange for giving up their employment rights to make a claim to tribunal.
Five key things to remember when dealing with a Compromise Agreements.
- Entering negotiation – treat this as a grown up conversation. Be honest and open from the
- Settlement amounts – before negotiation begins ensure you have a set limit. Be realistic about your figures and be prepared for some negotiation.
- Timeframes – if you are putting an offer on the table ensure you have set well defined timescales. Give the employee a reasonable amount of time to consider the offer, appoint legal representative and complete the appropriate paperwork, normally 5 working days is sufficient however there maybe exceptions.
- Emotional Journey – there is an emotional journey that the employee will go through, firstly shock and anger that they are no longer required in the business. Then there is denial, they start to believe that it isn’t them but the business at fault. Finally by the end of the process, they should have reached acceptance and this is when you will conclude the agreement.
- Conclusion – the final stage of the process is concluding the agreement, be prepared for some negotiation. Once the employee has instructed a legal representative they may request the wording or the final settlement to be amended. Remember you are in control of this process and if you are not happy with the amendments, do not agree.
Going through a formal tribunal can be time consuming and costly to the business and therefore a compromise agreement is an alternative with a fixed outcome. Remember this shouldn’t replace a formal process on every occasion.
Please Note: compromise agreements must be signed by an independent registered solicitor and the employer is obliged to pay up to £250 towards their costs.
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