Islington Solicitors

COMPROMISE AGREEMENTS ISLINGTON

What are compromise agreements?

Compromise agreements were introduced into the UK in 1993. They are termination of employment/settlement agreements made between an employer and employee, often used to settle disputes between employer and employee. The employee will normally agree not to bring an employment  claim such as breach of contract or unfair dismissal to an Employment Tribunal in exchange for a financial settlement.

These agreements can appear to be an attractive termination package but may not in reality be fair to the employee. This is because three months’ pay might sound like a good offer but if the employee’s notice period is three months you may only be getting that money tax free and without contract benefits and there may be an uncertain labour market, as is currently the case.

What are the basic principles of compromise agreements?

You should normally take advice as soon as you think an employment situation may lead to redundancy, or you are leaving your job after a dispute.

Compromise agreements normally require the following to be legally valid:

• the agreement must be in writing
• the agreement must relate to an employee complaint
• the employee must have received legal advice from a solicitor or other type of independent adviser on the provisions of the proposed agreement and its effect on pursuing legal claims in an Employment Tribunal.
• the adviser must have a contract of insurance in relation to the employment advice given
• your agreement should be tailored to your own circumstances.

If you are offered a payment in accordance with your employment contract you will almost certainly be expected to pay tax. If a one-off payment is made and is up to £30,000 then this will generally not be taxable.

Why use Islington Solicitors?

We are able to provide clear straightforward and accurate advice. We will go into detail in relation to the effects of a compromise agreement and what rights you may be giving up if agreeing to one. We will confirm with you that you are satisfied with the compensation offered and suggest ways in which you can approach your employer about increasing this amount.

Islington solicitors are best placed to advice on compromise agreements as we have experience in negotiating settlements on behalf of the employee. We can advise on how to structure payments to give the most tax efficient returns on settlement payments. We can ensure that other matters, such as outplacement assistance and references as well as length of service and other contractual benefits are all taken into account in the settlement as well as post termination restrictive covenants and confidentiality obligations.

Conclusion

Islington solicitors have a track record of defending employee’s positions, and fighting for a fair settlement through negotiation with employers. If you want your case dealt with professionally and thoroughly then do not hesitate to contact us.