Compromise Agreements (known as a Settlement Agreement in Great Britain) are essential tools for resolving workplace disputes and terminating employment relationships on mutually agreed terms. For the terms of the Compromise Agreement to be legally binding, you must receive independent legal advice.
O’Reilly Stewart Solicitors are experienced with dealing with Compromise Agreements and have answered some of the most frequently asked questions regarding signing a Compromise Agreement.
What is a Compromise Agreement?
A Compromise Agreement is a legally binding contract used frequently to end an employment relationship on agreed terms, and settlement of any and all claims which may arise from the employment relationship (excluding a short list of exceptions).
In return for employees signing a Compromise Agreement and waiving their legal rights (for example, being able to claim for unfair dismissal) employees are usually given a compensatory lump sum payment.
As Compromise Agreements are known as Settlement Agreements in Great Britain, Great Britain based employers may refer to offering employees in Northern Ireland a Settlement Agreement rather than a Compromise Agreement.
When are Compromise Agreements used?
These agreements are often utilised for voluntary redundancies, or to reach an agreed exit which avoids either party using more formal internal processes such as disciplinary, grievance or capability. They are also used to eliminate the risk of a viable employment claim being brought against the employer.
Why do employees need independent legal advice for Compromise Agreements?
For the agreement to be legally enforceable, employees must have independent legal advice. This ensures that employees fully understand the terms and implications of the agreement.
The cost of legal advice is typically covered by the employer and specified within the agreement, however, where negotiation is required, the costs may surpass that which is covered in the agreement.
If an employee signs a Compromise Agreement, can they still pursue a legal claim against their employer?
Compromise Agreements provide for the settlement of all and any claims which may have arisen from the employment relationship. By agreeing and signing a Compromise Agreement, the employee can no longer sue their employer for ongoing, potential or future claims, unless the agreement specifies otherwise.
There are numerous limited rights that should be still protected by the agreement such as latent personal injury claims or a contractual breach of the Compromise Agreement. When going through the process, a specialist like those at O’Reilly Stewart Solicitors, will ensure these are included before the agreement is signed.
If you have been offered a Compromise Agreement or have any employment queries, issues or concerns, please do not hesitate to contact our experienced Employment Team at O’Reilly Stewart Solicitors who will be happy to help you navigate this complex area of the law.