When a compromise agreement is entered into, the employee signs a legally binding agreement that they will seek no further redress from their previous employer. That is to say a compromise agreement is a final, absolute settlement. It is therefore particularly important that the employee makes the right decisions through the process, particularly if there are other factors involved (for instance open grievances regarding discrimination).
Due to the complexity and totality of a compromise agreement employees are required to have a representative throughout the process. This can be a trade union representative who will normally have received training in the process. It is more usual however for a solicitor to be appointed to represent the employee.
Solicitors contracted to work on compromise agreements on the behalf of an employee are usually paid for by the employer, so an employee can expect to complete the process cost free.
When a solicitor is appointed on their behalf, it is important that the employee is happy with the individual selected. Normally one would expect that the solicitor would have specialist knowledge of employment law and specific experience of representing clients throughout the compromise agreement process.
There are a number of solicitors offices which specialise in compromise agreements, so it would make sense that the employer would approach these agencies first, as opposed to seeking more generically qualified or experienced solicitors.
The actual process can be complex if there are specific issues that need to be resolved, such as grievances that infer wrongdoing on the part of the empoyer. That said, most compromise agreements should run relatively smoothly allowing agreement to be reached quickly.
The key issue, as one would expect in such circumstances is money, i.e. the amount of compensation / incentive paid to the employee. How difficult this is largely depends on how well the company / employer has prepared for the situation. For example, many companies have processes and policies already in place to deal with the compromise agreement process, as well as experienced human resources specialists.
In these cases there is often a calculator or rate sheet in place which allows the level of payment to be decided based upon an employees salary and length of service with the company. In these cases agreement can be reached quickly and easily.
In more complex cases, or when dealing with ill prepared companies, the process can become more focussed on direct negotiation, which requires a higher level expertise on both sites.
Compromise agreements are often offered to older employees first, as these people tend to cost companies more, and, investments in training are likely to deliver a smaller return as they will leave within a shorter period of time.
This can further complicate the process of compromise agreement as, with older employees the issue of pension entitlements becomes more acute. So, older employees have to negotiate not only their lump sum pay out, but also the enhancements for their pension. Clearly these are big decisions for the employee concerned, so again, it is important that the employee is happy with the solicitor appointed.
Once negotiation is complete and terms are agreed, all that remains isf or the agreement to be drafted and signed by both parties.
Once that is done the employee is required to sign the agreement, agreeing that this is the final and only claim they will submit to the company. Once that is done, and the compromise agreement is processed, funds will be transferred to the employee to complete of process.
Patricia Montana is a solicitor specialising in employment law who has conducted hundreds of compromise agreements throughout his career. For more information on compromise agreements please visit http://www.compromise-agreements.org.uk/
Tags: legal, national, state, employment law, local, redundancy, severance, employment lawyer, employer solicitor, contract law