Compromise Agreement - What should be in it?

darren.reading

Thanks to some great advice on this forum, I have recently managed to close off a situation with my employer whereby we are going to enter into a Compromise agreement with regards the end of my employment with them.

There is a replacement for me joining in the next 3 weeks and I am to stay and carry out a constructive handover period, and I will then leave with a payment.

This will all be covered in the Compromise Agreement, and I please need some advice on what should be in there.

I am on 3 months notice, and I expect that this should form the basis of the payment with anything else that can be negotiated added on top?

Also, I believe that I am within my rights to have the employer pay for me to have the agreement reviewed by a solicitor of my choice?

Many thanks for your help.

cazziebo

well done - good conclusion.

Yes - the payment should be at least the 3 month notice, although no obligation on that if it's agreed between you. (ie you may forgo some notice in order that you go early.) However, start off looking for more than base entitlement.

Yes to the lawyer. The company will pay a reasonable amount (usually up to £250) to cover your own legal advice. If you don't seek legal advice then the agreement will not be binding. Make sure you use an employment law specialist - generalists may not be best placed to ensure you get the best deal.

darren.reading

Thank you.

So how do I justify starting at more that the base entitlement?

Liz_the_Whizz

Hi Darren (again),

Compromise agreements tend to be fairly standard legalistic documents these days - lawyers have seen to that . The reason they are pretty standard is that, whatever the circumstances leading up to it, they serve the same purpose - they are the only surefire legal way to settle a dispute over a contract of employment.

Your employer will get their lawyers to draw up a CA and will then pay for you to receive legal advice. This is because under statute (Employment Relations Act), the CA is only valid if you have had legal advice on it - you need to be advised what rights (eg to unfair dismissal) you are signing away. To prevent it all unravelling, employers tend to pay for your advice, though only on the CA itself.

As an employee, things to look out for are:

- clauses protecting you in terms of confidentiality and "bad-mouthing" by your company (you will equally be gagged, and if they can trace it back to you, you would have to repay any money you get)

- an agreed reference, which should ideally be attached to the compromise agreement and used in response to all requests from potential future employers

Obviously, the attractiveness of the package will be your biggest concern. You need to make what you can of the current employment climate, and how long you estimate it will take you to get a new job. People often gauge these things on how long you have been there as well (can't recall from the other thread on unfair dismissal, was it 2 or 3 years?).

I would negotiate on a fallback of 6 months minimum (3 months pay in lieu, plus 3 months compensation). Asking for 12 months may be a bit cheeky, but in view of the recession, not a bad starting point. Also check if pay in lieu of notice is taxable - it all erodes that lump sum.

If you come out at 9, you're doing fine:cool: .

Better than an Employment Tribunal, anyday.

Good luck with it, and your future career.

darren.reading

Thank you very much for your help and advice

Debt_Free_Chick

When you see your solicitor, they will normally comment on the settlement offered by the company and advise you whether to push for more or not.

I've never been able to get any more than six months, in positions where my notice period has been 3 months. What you're aiming for an amount close to what you would get if you went to Tribunal, instead. The Tribunal bases the claim on how long it is before you are likely to find another similar job.

Personally, I think you'd do well to get six months, but listen to what your solicitor says.

Assuming that six months is about right, then don't forget you want further payments in lieu of the benefits you would have got for those six months e.g. car/allowance, pension, life assurance etc etc. And .... if you would have received a bonus in those six months, add that on too. Normally, I go for the pay bit first .... once they've agreed to that, I go back for more Your solicitor will negotiate for you, if you want - but the cost of that bit will not be met by your employer. As Liz says, they will only meet the cost of having your solicitor comment on the legality of the agreement.

As for solicitor's fees - see what they offer - but aim for £500. Better still, call a few local employment solicitors and ask for a fee estimate, then you have some idea of what you actually need them to pay you.

Do they pay into a pension scheme for you? What type of scheme is it?

Lynn11

I had to sign a compromise agreement recently for my ex-employer now so that we receive the money. they advised us of 2 lawyers who they had set up agreements to pay their fees and the agreement was more of less the deal they presented and that you will not take them to court on discrimination etc. It is fairly straight forward but legally you do not need to sign it, as advised but as I wanted my money no other option.

darren.reading

Thanks for all your advice.

I am due to be presented with my compromise agreement on Friday.

Is the best course of action to make no comment at all, even if I feel that it is widely off the mark, and to run it past solicitors and then discuss with my employers on the back of the solicitors advice? Or should I try and nigotiate with my employers first?

Cheers.

Liz_the_Whizz

It depends a bit on the deadline your employer has set to get the CA signed.

I would be inclined to take it away and think about their offer over the weekend at least before deciding how/when to respond (and maybe get some free MSE advice;) ).

Have you got a lawyer lined up to give you advice on the CA? Remember that advice/negotiations on your lump sum will cost extra. Make sure you clarify what is chargeable so you can decide whether there is likely to be any real benefit in getting someone else to negotiate on your behalf.

In all honesty, you will probably do just as well going it alone unless your employment relationship with your boss has completely broken down, which I don't think is the case.

When you get the CA, you will know better where to pitch it. Keep your negotiations polite, well-reasoned and realistic. Try and base your arguments in fact (eg if your pay-in-lieu-of-notice is taxable, ask if they can take this into account by uplifting the compensation payment), as well as potential hardship (eg it could take 6 months to get a job with imminent recession rather than 3) and guilt/sympathy (eg Christmas on the way).

Good luck - keep us posted.

darren.reading

Thanks again for your help and advice.

I was presented with my Compromise Agreement on Friday. It detailed PILON for 3 months and then a compensationary amount equating to 3 weeks pay.

I have discussed with my solicitor.

The way that the agreement has been worded gives no scope for my employer to claim a redundancy type situation, and my solicitor believes that the compensationary amount is very light, and should be in the region of 3 months pay given the current climate.

How best do I approach this with my employer / HR department. I do not want to rock the boat, I am happy now that I am leaving this employment, and they have given me a leave date 1 month away for a handover up to which I will be on full pay.

I do not want to jeopardise what for me is the best way out of this mess, I do not want to seem greedy, yet with 2 young kids and the current climate for getting a job, I do not want to sell myself short.

Many thanks for your continued help.

cazziebo

it's normal to have a no redundancy/unfair dismissal claim written in.

Write to your employer, say that you have taken advice, and do not believe this to be a satisfactory proposal. You propose three months' pay as compensation.

Simple. They will agree or not, and it's up to you to accept or not. When I negotiated my own one, the lawyer did the bargaining for me (although I understand that's not the norm).