Employment (Business)

Compromise Agreements

When the relationship between you and one of your employee’s breaks down, one solution is to enter into a “Compromise Agreement” with your employee. A compromise agreement is a legally binding agreement which gives the employee an agreed tax free lump sum in return for agreeing not to pursue their case in the Employment Tribunal or County Court against you.

For the compromise agreement to be valid, it must be in writing, specify the dispute being settled, and state that the conditions governing compromise agreements have been complied with. It is your responsibility to draw up a compromise agreement for consideration by your employee.

An employee must also received independent legal advice. Usually you as employer will pay or contribute to the costs involved in your employee taking such advice.

If you have a dispute with an employee which needs resolution by way of a compromise agreement or other negotiation, speak to one of our Employment Team who can guide you through the process and get your dispute resolved in the most cost effective way possible.