Employment rights of employees and workers are now more protected than they ever have been, and the scope for employers getting it wrong, or employees claiming you have, has increased with the added protection and regulation.
Compromise Agreements have long been used as a means to draw a line under the risk of a claim by an employee upon termination or threatened termination of employment, whether that is termination by the employer or employee. Many employers now produce Compromise Agreements as a matter of course to make sure as far as possible there is no comeback from departing employees, especially in circumstances of dispute, potential capability dismissals, circumstances of long term absence, and redundancy.
The essence of the agreement is that the employee waives their employment rights (subject to a few exceptions), including the ability to pursue any breach of those rights to a Tribunal or County Court. In return, the employee is compensated for their loss of employment in a sum agreed between the parties.
In addition, particular clauses should be incorporated to further protect the Company from tax demands in relation to the compensation sum, breaches of confidentiality and restrictive covenants and defamation. If the employee poses a threat to the company by means of customer following, but is not subject to restrictions following termination, it may well be advisable to seek to impose protection through the compromise agreement.
The employee will have no choice but to take legal advice on the agreement as signing it will mean they waive those rights. The agreement will only be binding, and therefore of any use to you as the employer if it is certified by a solicitor or relevant legal advisor. It is therefore standard for the employer to contribute to the employee’s legal fees, payable only upon receipt of the signed and certified agreement – the agreement is not signed, there is no contribution to those costs. Current contributions tend to be around £250.00 to £500.00 plus VAT.
Costs to you for us providing an agreement for issue to an employee are likely to be in the region of £350.00 to £500.00 plus VAT.
What we need from you:
To prepare and negotiate the terms of an agreement, we will need:
- Employee’s name and address
- Details of the dispute
- Copy contract or details as to service history, pay, benefits
- Whether any holiday has accrued
- Details of the settlement offer
- Pension provider details if appropriate
- Share option agreement/ accruals
Bulk agreements:
If you have to dismiss many employees at the same time, or over a period for the same reason (usually buy out/ relocation of business), we can act for the employees at a reduced contribution to costs per agreement. We suggest a meeting with you before the issue of agreements to employees to iron out any potential problems or issues which employees may raise. This allows for a smooth transition from production of the agreements to having them completed, with employees having been properly independently advised. Often it is also helpful to advise the employees on site to avoid disruption of the working day by individuals leaving for appointments.
For further information, initial chat and fees quote email Clive Mackintosh or call the Employment Team on 0161 236 5646.