Thoughts on a compromise agreement?

cheese189

Hi all,

I've been off work with stress/ depression for a few months and have been offered a compromise agreement to leave my post and move on (something I would really like to do).

My employer haven't actually offered a financial package, but have asked me/ my union to suggest a figure. Is this normal?

I know that they need to make redundancies this year to balance the books, but I don't want to rush in to anything either.

Anyone got any thoughts, suggestions or experience on this they can share - either in the forum or by PM?

Thanks

hcb42

wouldnt say it is normal, but certainly possible.

It is a compromise agreement, so you would expect a bit more than if you were just forced out as it were. so if you are on 1 month notice, ask for 3 months salary (gross) as you may not be required to pay tax on it. Be realistic, and expect not to get everything you ask for...so be prepared to negotiate from your opening bid.

you also must agree a reference, and a reason for leaving.

jazzyman01

I would work out what you would get as a redundancy payment (based on your company's terms) add in your notice period and then a little extra, say a contribution to your pension over and above. After all they can only reject it. Do ensure you agree a reference and add it to the agreement.

Helen1971

A compromise agreement is a good way of leaving a job with an agreed reference and a lump sum. If you truly want to move on, this is the best way to do it. If you've been off for a while with stress, your employer will be looking for a way out without having to go down the road of terminating your employment, which brings its own problems.

Your employer is being cute by asking you to suggest a figure. That's because they know that if they suggest a number, your union will tell you to reject it and hold out for more. You can't just name a sum though; it has to be based on a rationale. The suggestion of three months plus a bit more in recognition of the fact that you're making their lives easier by going sounds like a good opening gambit.

Good luck.

Te_Awamutu

As others have said, you need to have a rationale. for any sum you suggest. Remember that your employers are likely to try to negotiate, so it might be worth going in higher than you would ultimately accept. Your union rep should be able to give you advice on what's reasonable and what f figure has been agreed in the past.rt on

You also need to bear in mind that compromise agreement payments are tax free as long as they are under £30k. Anything above this would be taxed at your normal rate.

princessdon

Te_Awamutu wrote: »

As others have said, you need to have a rationale. for any sum you suggest. Remember that your employers are likely to try to negotiate, so it might be worth going in higher than you would ultimately accept. Your union rep should be able to give you advice on what's reasonable and what f figure has been agreed in the past.rt on

You also need to bear in mind that compromise agreement payments are tax free as long as they are under £30k. Anything above this would be taxed at your normal rate.

Good advice above Re the union - but in reality I doubt they'd give more than you stat payment plus maybe a bit extra. Just to point out that CA are NOT tax free in every situation - any Ex - Gratia payments are tax free to 30K (Incuding Stat Red payments). However, PILON, holidays etc can form part of the CA and will be subject to tax and NI if contractual.

Also in your circs I'd get an agreed wording for your reference into the CAand also that unless requested the no of days illness won't be. Also get an agreement that this is not voluntarily and that it is Comp Red (important if you have other insurances/benefits etc).

Are they paying the fees for the CA?

cheese189

Thanks all for your comments so far...
Advice seems to be go in high with a minimum in mind- I'm thinking PILON plus what statutory redundancy would be for me is the minimum- anything extra is a bonus but I don't want to muck up the chance of a good reference for the sake of a few quid. Luckily we've no debts and the mortgage is paid so I appreciate I'm in a much better position than some.
Interestingly enough I've had a couple of job offers for contract/ freelance work in the past week or so (completely out of the blue) which has perked me up a bit.
Thanks again everyone.

unsure

I would think the union is in a good position to propose a figure based on length of service, current salary and likely payment if a redundancy were agreed. Given that they've asked you to suggest the figure they are probably going to try to haggle it down from the first figure so maybe add say 25% for "time to find a new job and pay bills in the meantime" or some such... and then expect to compromise.
If you are looking to move on anyway it sounds like it might be a good result for all concerned, especially if you now have other irons in the fire as well.