Legal documents that are used in cases of redundancy or dismissal by offering payment agreed under certain conditions are generally termed as compromise agreements. Employers generally use compromise agreements to speed up the process of ensuring that a dismissal will not affect the employer in the future. Once an employee has agreed to the conditions specified in the agreement and signed, he/she will not be able to make claims against the employer in future. Employers can use compromise agreements to effective means while they are dealing with redundancy or termination of their employees. In most cases, the agreement will also involve a notice element in your contract of employment and may provide for a “payment in lieu”. Payment in lieu of notice is the amount owed by the company to an employee, if he/she is dismissed with immediate effect. This amount is worked out by how much they would have been paid if they had worked their contracted notice period.
The agreement’s overall purpose is to settle a dispute over a dismissal or sometimes to prevent any possibility of further claims following redundancy. It prompts an employee to agree to waive statutory claims such as discrimination or unfair dismissal. Compromise agreements will be valid only if it is in a written format and both the parties signed have signed to agree to the terms. An employee cannot negotiate potential future claims, though claims that have already arisen, unknown to the employee, can be waived. The documentation is a final settlement of any claims that the employee has against the employer or vice-versa.
Since the compromise agreement is a legal contract, a solicitor should be involved to ensure both the parties have officially signed the document. A solicitor can also provide advice regarding the terms of the contract and determine if the amount of compensation being offered is adequate.
A standard compromise agreement should contain:
o Details regarding any compensation that might be offered
o Confidentiality given to you by the employer
o Assurance that there will not be legal actions in the future
o An acceptance of each and every term by the employee
The contract is conducted so that once signed, the employees will not be able to bring a claim against the employer for anything at all. Both sides usually agree to a clause in the agreement guaranteeing confidentiality. If the employee is not happy with the terms in the contract that have been offered, it is not compulsory that they sign it. Employees may continue to negotiate through the solicitor until an agreement is reached. If negotiation fails to bring about an agreement, the employee may pursue the case as he likes. This means that the employer might deny or refuse to pay the agreed compensation package and the employee will need to take the case to a tribunal for settlement.
Compromise agreements are beneficial to both employer and employee. It enables an employer to define conditions under the departure of an employee and this in protects the organization from future claims. The employee’s reimbursement from this compromise agreement is the financial amount received in return.