What Is An Employment Law Compromise Agreement And Why Are Employees Asked To Sign Them?

(Newswire.net — February 12, 2013) Milton Keynes, Buckinghamshire, UK — Increasingly, UK employees are being asked to enter into employee compromise agreements as more businesses seek to manage out excess staff while at the same time circumnavigate tough UK employment laws.

As a triple-dip recession takes hold in the UK, major stores across the country are embarking on major re-organisations and restructuring to save cost across the board.

Jessops, Blockbuster and HMV are just a few of the household names to have collapsed in recent months, putting further strain on an already beleaguered employment market, leaving many more thousands of jobs at risk.

But it’s not just the big corporation that are feeling the pitch. As small and medium sized employer organisations also continue to feel the pain from the fall-out of a very prolonged credit crunch, many of these busineses that have been holding out on shedding staff numbers are now coming round to the realisation that job losses are necessary.

The realisation that the UK economy is not turning around any time soon, is forcing employers to make the hard decision of reducing staff numbers.

The challenge that many smaller and medium size firms face is how to properly navigate what can be complex employment laws, regulations and procedures without falling foul and being an unwitting recipient of an employee claim for compensation for either breach of contract or employment laws and regulations.

Which is why employee compromise agreements are so prevalent today.

A Compromise Agreement, also referred to as a Settlement Agreement is a specially drafted legal agreement. It allows an employer to terminate an employee’s contract of employment on mutually agreeable financial terms, regardless of the reasons for the termination, with the core condition that the employee will not be able to pursue any employment claim.

As a legally recognised and binding agreement, where an employee signs an employee compromise agreement, so long as the agreement has been properly formulated to satisfy prescribed conditions set out in section 203 of the Employment Rights Act 1996, an employee will be prohibited from bringing any further claim for compensation in respect of their employment.

It is in effect a safety net for employers, as it allows them to safely end an employment contract without fear of a future potential employment claim by the employee.

Some employees will naturally feel suspicious and concerned if their employer hands them a lengthy legal document entitled “without prejudice subject to contract – Compromise Agreement”.

In many cases however, there is nothing for employees to be concerned about and in any event employees are required to obtain the advice of a solicitor who will be able to advise and explain the implications of the agreement and in some instances negotiate a better compromise agreement settlement.

If an employee has concerns as to the legality of the proposed termination of their contract of employment, or they feel that they are not being treated fairly or not being given a fair deal, speak with a specialist employment law compromise agreement solicitor who will be able to properly advise employees of their rights and their entitlement on termination of employment.