What is a compromise agreement?

It is regrettable that we are now living in a climate where we are seeing an increase in ‘forced’ terminations of employment  contracts.  Many employers, particularly in the public sector, are looking to reduce staffing levels and to facilitate the termination through compromise agreements.

The concept of a compromise agreement was created in 1993.  It is a document that records an employee’s agreement not to pursue an employment related claim, such as unfair dismissal or breach of contract. The agreement is usually in exchange for a sum of money.

In law the agreement will only be valid if certain conditions are met and in all cases if you are being required to sign a compromise agreement your employer should send you, along with the  draft agreement, to an independent solicitor  for advice.

So why is it so important to seek independent advice?

At MJP when we are instructed to provide advice we run through an established check list to make sure that the agreement you are being required to sign is valid and more importantly fair. 


We will check whether:

the sum offered to you represents a fair compromise


the reason given for termination has any bearing on you income protection scheme if you have one


your contractual entitlements will be protected until the termination comes into effect


you have as part of the compromise received compensation for accrued holiday, notice, and other contractual benefits




 the treatment and timing  of the payment is structured in a way to mitigate your tax liability


there will be help in finding alternative work with the production of a pre-written reference


the restrictive covenants are fair

Who pays for this?

The practice is that the Employer will pay a contribution towards the cost which is in the majority of cases will cover the solicitor’s fee.  In the main therefore it will cost nothing to seek advice.

If you wish to know more or to arrange a FREE consultation with us please call David Pett on 01603877000 or email him at davidpett@m-j-p.co.uk

Posted by David Pett

Government proposals for employment law changes can only serve to restrict access to justice

Prime Minister David Cameron and Business Secretary Vince Cable have today announced proposed reforms to our employment legislation that includes:

• A fee to lodge a claim 


• Compulsory mediation in all Tribunal claims

• An increase in the level of continuous employment for claims of unfair dismissal from one to two years

The Government considers this will encourage employers to hire more employees and to in doing so help to reduce unemployment.  Those who represent employees consider this to be nonsense saying employment legislation has never deterred employees from engaging new staff.

The Government estimates this will lead to 3,700 - 4,700 fewer claims. Also, the potential introduction of a fee, provided employers are not subjected to a similar burden, could help to guard against spurious claims, which inevitably cost employers time and money.

These changes will have no affect on discrimination law and the ability to claim protection from day one.

Although employers will clearly welcome these changes once must question whether the who original objective behind Employment Tribunals of making remedies easily accessible and ‘litigant in person’ friendly has now become rather lost.

There seems to be no rationale for change and the propose reforms seem to serve little purpose other than to restrict and frustrate access to justice.