Employment Law – Compromise Agreements

I found this article relating to Employment Law which I thought may be of interest. So here it is for you

An employer that is brought before an Employment Tribunal on a claim of discrimination, unpaid redundancy payments or unfair dismissal can be a hugely embarrassing experience and can damage a company’s reputation. Which is why Compromise Agreements are beginning to become increasingly popular when it comes to very damaging claims being brought to an Employment Tribunal.

A Compromise Agreement is signed between an employee and their employer, it forms a special type of contractual relationship between the two. What it means is that the employee will receive a financial sum that is negotiated in return for the employee agreeing to discontinue an existing claim against the employer or that they will have no further claim against the employer in the future. Essentially what this entails is the employee waiving their statutory rights in exchange for a one off payment. The signing of compromise agreements is the only way an employer can be sure that an employee will not be able to claim against them in an Employment Tribunal.


Introduced as part of the Trade Union Reform and Employment Rights Act of 1993, Compromise Agreements must contain both the sum to be paid to, and the restrictions now being placed on the employee from the signing of the agreement. The employer will need to list all the statutes that the employee is agreeing to waiver their rights under because judges have ruled that ‘blanket agreements’ where the employee just agrees to sign away their rights are considered unenforceable. The employee must also receive legal advice from a solicitor, usually paid for by the employer, before the agreement can be deemed valid.

The main benefits from Compromise Agreements are that they brings certainty and a quick resolution as oppose to the sometimes stressful and drawn out process of bringing a claim before a Tribunal. In a Compromise Agreement the employee knows how much they will receive and the employer knows that they will not have a claim filed against them in the future. If however an employer refuses to sign a Compromise agreement then they retain all their statutory rights and can make a claim to the Tribunal. Renegotiation of the terms of the agreement is a common substitute for a refusal to sign and this can sometimes lead to a larger compensatory sum being paid to the employee.

If current trends continue then the use of Compromise agreements will continue to expand as a legal option and a tool valued by employers.


I am a legal writer covering advice on topics of law, for further text and similar works visit employment law or contact a solicitor today.For more legal advice and information, and for free legal resources I suggest you visit lawontheweb.co.uk.
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