Contact: Khizar Arif
Phone: 020 8528 1132
Fax: 020 8528 1001
Mobile: 07807 583 836
A compromise agreement is a binding contract following the termination of employment, usually providing for a payment by the employer, which may provide for a ‘payment in lieu of notice’, in exchange for which the employee agrees not to pursue any claim to an Employment Tribunal or Court.
Employers are increasingly using compromise agreements as a way of preventing potential claims to a Tribunal or Court, especially in cases of redundancy. The only way an employer can be sure that an employee will not complain to a Tribunal after redundancy is to persuade them to sign away their right to do so. This can be done in a compromise agreement and has the effect of turning the redundancy package into a ‘full and final’ settlement of any claims.
The agreement will state the breakdown of the payments the employee is receiving and the extent to which the sums will be paid free of tax. The basic position is that the first £30,000 is free of tax but the employee will have to give a tax indemnity to the employer within the agreement. The employee must have the agreement explained by a ‘relevant independent advisor’ who must certify that advice has been given. In ordinary cases, we will not charge an employee more than the amount of fees which the employer has agreed to contribute for the employee to take such advice.
Please feel free to contact us for a no-obligation discussion.
Arif Jakobs Solicitors is authorised and regulated by the Solicitors Regulation Authority (SRA No. 561976)