The Finances Economy

If an employer gets summoned to an Employment Tribunal as a result of a claim bought against them for discrimination, unfair dismissal or unpaid redundancy payments it can prove an embarrassment to the company and could ultimately affect the company’s reputation.

This is exactly the reason Compromise Agreements are growing in popularity especially when it involves damaging claims being bought to an Employment Tribunal. 

A compromise agreement is an agreement signed between an employee and the employer and it forms a special type of contractual relationship between the two parties.  The inference is that the employee will receive a financial sum negotiated between the two parties.  Having received this sum the employee will agree to stop with immediate effect any existing claim against the employer and that there will be no further claims in the future.  In effect this means the employee is waiving their statutory rights as exchange for a one off payment.   Only the signature of the compromise agreement by the employee will assure the employer that no more claims can be bought against them in an Employment Tribunal.

Compromise Agreements were introduced as part of the Trade Union Reform and Employment Rights Act of 1993.  The agreements must contain the amount agreed upon and the restrictions placed on the employee following signing of the agreement.  For more information on all aspects including compromise agreement employment law, visit compromiseagreement.org.uk