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:
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
