Compromise Agreements
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This is a formal legal agreement by which the employee agrees to give up claim to unfair dismissal or other employment complaint in return for a financial settlement from the employer.
To make such an agreement valid it must be in writing and must only have been concluded after the employee has received independent legal advice (i.e. from a solicitor). Such legal advice would be paid for by the employer and typically should not cost more than £300 from a local legal firm. In practice most employers will employ their own solicitor to draw up the agreement.
The other alternative is to use ACAS to act as a conciliator between both parties, this has the advantage of lower costs but sometimes such mediation can be intrusive and time consuming. Further details about ACAS mediation are available from the link given opposite.
Do I need a compromise agreement?
The belt and braces argument is yes and that is the advice most solicitors will give. However despite the highly publicised cases few employees want to go through the hassle and expense of taking their employer to a Tribunal. In our experience if the employer and employee have come to an agreement which is seen as fair by both sides a compromise agreement is not necessary. It is really up to the employer's judgement as to whether there is a risk of a Tribunal claim. If there is any doubt go for an agreement.