Solicitors in Leeds

COMPROMISE AGREEMENT FREQUENTLY ASKED QUESTIONS

My employer says I must go home for my notice period – do I have to comply?

Your contract may include what is often called a “gardening leave” clause, in which case you will have to abide by it. But if your employer has not included such a clause then technically he has no right to tell you not to come to work. In any case, if your contract does not have a gardening leave clause payment in lieu of notice may well be tax free if your gardening leave covers your notice period. If you accept that you will be leaving your employment one way or the other the complicated issues of what payments are taxable, and what you may do after the end of your employment, are best set out in a Compromise Agreement.

The main reasons employees commonly sign compromise agreements are:

• The employee generally receives an enhanced ex gratia or compensatory amount in addition to being paid contractual notice money
• The odds are generally in favour of the Employer under English law for Employment Tribunal claims. Pursuing a dispute in the Employment Tribunal is risky, takes many months and is expensive if a lawyer is used
• Employment law, like English law generally, is predominantly loss rather than compensation based. Even if an employee has a strong claim to have been unfairly dismissed, over and above contractual entitlements, the employee will generally have to be unable to secure employment for 3-4 months to make rejecting compromise agreement worthwhile
• The employee will generally not be required to work his or her notice period, and will be paid all sums, including contractual notice and ex gratia amount upfront
• The employee will generally be free to seek another job immediately

Can I/should I negotiate on the terms offered in the Compromise Agreement?

• There are 2 aspects to this question, being:
• As the Agreements are statutory and generally quite standardised (in order to make the Compromise Agreement valid and legally binding, it must include the vast majority of content included) there are few aspects of the wording which need to be changed/negotiated and/or which the Employer will generally agree to amend and/or delete
• It is not unusual to seek to negotiate on the ex gratia payment, particularly if the employee has been offered an amount at the lower end of the likely range of ex gratia amounts.

Why has the employer set a deadline for the Agreement to be signed?

• This is generally a tactic by the employer to ensure that the Agreement is concluded rapidly. Whilst any deadline should not be ignored, in practice, many employers will still agree to conclude the Compromise Agreement even if there is a delay due to negotiation or stand off between the parties resulting in the deadline passing.

Possible Claims After Signing a Compromise Agreement

• As a rule, there are only three types of claim that can still be made after a compromise agreement has been signed. These are:
• 1. Personal Injury – This type of claim is generally still allowed, excepting claims for injuries that were already existing at the time the agreement was signed. If the termination was due to absence for stress or depression, it is unlikely that the claim would be allowed.
• 2. Pension Rights – A claim for accrued pension rights should still be possible.
• 3. Breach of Contract – If your employer breached the terms and conditions outlined in the agreement.