The Legal Side of a UK Compromise Agreement

When entering into a compromise agreement in the UK (laws in other countries may vary), there are a number of requirements to be adhered to in order for it to be legally binding. These include:

The employee must have sought independent (i.e. different to that of their employer) legal advice before entering into the contract.

• The solicitor which provided the advice must be identified within the agreement.
• Compromise agreements must be in writing.
• The contract must be drafted in line with the conditions governing the creation of compromise agreements.
• The agreement must identify the facts upon which, the arrangement has been formed i.e. details of what grievance/s the employee has with their employer.

Is legal advice mandatory when forming a compromise agreement?

Yes. If you have not received independent legal advice the agreement will be invalid and so the employer will not have to abide by the terms of the contract – this means they might be able to avoid paying out any compensation.

Compromise agreements are lengthy documents that can contain complicated legal language – it is therefore essential that the employee understands exactly what they are agreeing to. Your solicitor might also be able to renegotiate the terms of the agreement so they become more favourable to you. Alternatively, your solicitor might recommend that you will be better off if you take the employer to a tribunal, for example; on a case of discrimination in the workplace. Either way, your solicitor will advise you whether you should sign the agreement in its current format.

I have signed a compromise agreement and still wish to bring a claim against my employer, where do I stand?

There are only 3 specific areas in which you are still able to take your employer to a tribunal despite signing a contractual compromise agreement:

1. Pension Funds – An employee may still be entitled to make a claim against their employer for any accumulated pension contributions owed during their period of employment.

2. Breach of Contract – If the employer fails to honour their terms and conditions provided for in the agreement, the former employee has grounds for a legal claim. An example of this would be where the employer has not paid the full amount of compensation money agreed upon.

3. Personal Injury Claims – In certain circumstances this type of claim remains valid after the signing of a compromise agreement. One requirement is that the former employee was not aware of the pre-existing injury. If the employee was aware at the point of signing the agreement then a subsequent claim cannot be exercised.

In any event, make sure that when taking advice on a compromise agreement, you do so from specialist compromise agreement solicitors. Again, be aware that this article applies to the UK only – laws in other countries may vary.