compromise agreements

If you've not been in this situation before, your first question may simply be "what is a compromise agreement"

A 'compromise agreement' is a legally binding agreement between you and your employer which accompanies the termination of your employment. It usually provides for a payment by your employer, in return for which you agree not to pursue any claim you may have to an employment tribunal.  In many ways it resembles a "clean break" divorce.  There may be other obligations placed on you, for example concerning restrictive covenants and confidential information, but we will deal with that a little later.

"Why am I being offered this"

Compromise agreements are offered by employers when terminating employment for many reasons, however they are most commonly used in redundancy situations.    They provide the employer with the security that you will be prevented from brining a claim and they provide the employee with a payment in return.  Simply because an agreement has been offered does not indicate that you have a claim, although this is something that will be discussed in more detail with your Solicitor.

"Why do I need a Solicitor"

In order for the agreement to become legally binding, it must be explained to you by an independent solicitor.

"How long does the process take"

The length of time it takes to complete the process can vary, however I am committed to making the experience as simple and stress-free as possible.

"Is the payment really tax free"

The payment made to you under the Agreement will often be described as ex-gratia, meaning that your employer intends to pay it to you free of tax.  Unfortunately however, this does not always mean that the payment will not attract the attention of HMRC and possibly be deemed taxable.  The threshold for tax is £30,000, however tax can be attracted on payments less than this if it is deemed that the payment represents a payment in lieu of notice.  These are all issues that will be quickly ironed out when you see a solicitor.  To assist the solicitor in giving the appropriate advice, it would be helpful if you were to provide a copy of your contract of employment.

"How much will this cost"

Your employer will have recommended a solicitor to give you the necessary advice, and they may be willing to meet their costs, subject to a cap.  The solicitor recommended is independent of your employer and owes a duty to you, the client.  If you chose to see a different solicitor, your employer does not have to pay for the legal advice and you may have to foot that bill yourself.

"Where do I go from here"

The first step is to make the appointment with your chosen solicitor, either the nominated solicitor or perhaps one of your choice.  He or she will then meet with you, explain the various terms and effect of the agreement and provided that you are happy to do so, complete the agreement with you.