Legal

In short it is to protect the employer from being sued after you have received your settlement sum. It also allows you to be paid the settlement sum in a taxfree wrapper (up to £30k). You are agreeing not to pursue any claim you may have against your employers in either a court or an employment tribunal.

No, everything can be done remotely, and most employers will accept scanned or e-signatures.

It gives more protection to the employer - thereby avoiding the claim that you did not understand the document, and therefore making it more binding. The solicitor giving the advice must also sign the agreement and certify that the appropriate advice has been given. One of the conditions under the compromise agreement is that the Solicitor needs to be insured to give advice. All solicitors are covered by an indemnity insurance covering any negligent advice.

You have probably already negotiated a settlement figure directly with your employers but there are lots of other terms in the compromise agreement which are legalistic and refer to sections of Acts and Regulations which you may never have heard of. We shall also go through issues like tax, pensions, benefits, and the possibility of negotiating an increase in your settlement figure.

No, if the compensation package is less than £30,000. But you do have to pay tax on, notice in lieu, holiday pay, bonuses, perks etc. You should also keep your compromise agreement safe in case the taxman asks on what basis you have received these sums.

Yes, but only after say 6 months. The taxman does not like employers and employees to abuse the £30,000 tax free wrapper.

There may be provisions in the contract which will need to be checked by the solicitor. For example, the notice period, any enhanced redundancy payments, termination clauses and most importantly post termination restrictions and bonuses.

If the agreement is agreeable to you and there are no amendments we could have it executed in some cases there and then. Most agreements will have an “advisors’ certificate”, this is where the solicitor has the certificate on their headed paper signed and dated. Other types of certificates only require the solicitor’s signature, date, and stamp.

There will be a long list of statutes in the compromise agreement (such as the Race Discrimination Act, Sex Discrimination Act, Employment Rights Act) and many more, under which you will agree not to bring a claim. You should not be concerned by this. As the compromise agreement is intended to be a full and final settlement of all claims. The employer needs to list these such claims to be able to enforce the agreement.

Most employers will attach a reference to the actual compromise agreement. Some will only give basic information such as when you started, your position, days off sick and when you left. The reason for this, is for consistency with all other employers or to avoid a situation where something is said which could be detrimental to you and expose the employers to the risk of being sued. As a result, most employers will play it safe and provide a basic reference.

There is no legal or other obligation on you to sign the compromise agreement if you are not happy with it. At its simplest, refusing to sign means that there is no agreement between you and your employer, and you are free to make a claim to the employment tribunal (which must be within 3 months of your termination date). Do not forget that you might have an opportunity to appeal any termination, you should exhaust any such remedies before commencing tribunal proceedings.

Usually we can see if there is a way to renegotiate a settlement figure. It would be helpful if there had been previous grievances or complaints lodged but sometimes we can simply try and persuade the employers to pay more.

The employer must consider all alternatives including continuing to furlough employees and failure to consider all alternatives may be a breach of proper consultation.

Recent Case of Lynne Cornell –v- Capita Symonds Limited. Check your contract. If it says employers chose to make a PILON (payment in lieu of notice) then the employers are left with more leeway on whether to use it. Due to this, on termination they can make a payment for redundancy or other compensation for loss of employment rather than a PILON which is taxable saving them tax and making you more likely to benefit from an enhanced redundancy.

Once a compromise agreement has been signed by all parties, any agreed compensation will usually be paid within 7 or 14 days. Sometimes, it goes through in the next company salary run. The payment date will be specified in the agreement. You should also register for state benefits, even if you are not entitled to them, because your national insurance will then be paid by the government. You should check any unemployment insurance policies which may kick in.

Managing Partner at Garner & Hancock

Any questions you can contact him on 020 8232 9560 or