How do I get a compromise agreement?

If you’ve been offered a compromise agreement by your employer, it probably means you’re in Northern Ireland. So are we. Our main base is just outside Belfast – in Glengormley, County Antrim. We also have offices in Leeds, London and Gateshead, which means we can assist clients across the UK.

This article tells you more about compromise agreements.

What is a compromise agreement?

A compromise agreement is known as a settlement agreement in the rest of the UK. The name changed over there in 2013 because it was thought ‘settlement’ was a better descriptor – the agreement reached is not necessarily a compromise.

However, it’s still known as a compromise agreement in Northern Ireland, and it’s basically the same thing.

So what is it?

Usually, the compromise is that you agree not to take your employer to the employment tribunal, while they agree to pay you a sum of money – the settlement.

Sometimes the compromise agreement is known as a non-disclosure agreement or NDA, because you might agree to keep the agreement a secret. If you lose your job as part of the deal, it might be known as a severance agreement.

What’s the law around compromise agreements?

Because a compromise agreement is a legally binding document, you have to take independent legal advice before you sign it. That’s where employment lawyers like us come in. We have the experience to advise you whether your employer has made you a reasonable offer, or whether we could help you to negotiate better terms. As well as giving advice as required by law, we help take away the stress and ensure you get the best deal.

For example, we might find you’ve been discriminated against, or that the process your employer used to dismiss you was unfair. If that happens, we can help to make a bigger claim on your behalf. Or we can arrange for part of your settlement to be paid into your pension, which means it will be free of tax. Or we could negotiate permission for you to discuss the compromise agreement with your immediate family, instead of keeping it completely secret.

As you can tell, there’s a lot to consider, so it’s wise to talk to us early.

When might you get a compromise agreement?

One common reason you’ll be offered a compromise agreement is because your job role is being made redundant. If you get offered a compromise agreement instead of redundancy, talk to us as your legal advisers so we can ensure the offer that’s been made to you is fair.

The other main reason is because your employer has behaved badly towards you in some way, and you’re being offered a settlement by way of compensation. For example you might have been bullied, harassed or intimidated or victimised at work.

If you have a protected characteristic and you’ve been discriminated against, you might have conversations with your employer that they describe as ‘off the record’ or ‘without prejudice’. However, anything said in those circumstances can be used as evidence at the tribunal, no matter what your employer may say. Again, it’s important to take expert advice about this.

Note that your employer is not allowed to put pressure on you to accept the compromise agreement you’ve been offered. Acas suggests that 10 days is a reasonable amount of time to consider whether or not you’ll accept the offer. That’s plenty of time to start gathering evidence and arrange to have an initial chat with us.

Why is a compromise agreement a good idea?

The UK government encourages employers and employees to reach a compromise (or settlement) rather than go to the tribunal, as it’s quicker, easier and cheaper for everyone.

Your employer is likely to prefer to reach a compromise agreement rather than going to the tribunal, because court costs can mount up (the employer usually has to pay), the process can take time, and the outcome is uncertain.

You’ll probably prefer it too, because you’ll get a speedy payment so you can move on. It’s a nice clean break that leaves you with money in the bank – maybe even tax-free money.

On the other hand, if you have a strong case, it might be best to go ahead and make a claim at the tribunal. When we speak, we’ll let you know your chances of winning, and how much you might be entitled to.

What does a compromise agreement include?

The amount of money included in the settlement is made up of various elements depending on your situation.

For example: it could include any redundancy pay you’re entitled to or an element of compensation, payment in lieu of notice (PILON), outstanding holiday pay plus commission and bonuses, and other employment benefits such as your company car and mobile phone.

As part of the negotiations, you might request items of value to you that don’t cost money, such as a good reference to help you find another job.

Your employer might request items that are of value to them, such as your promise not to work for a competitor for a certain period of time, or a commitment not to poach any of their staff.

Note that, if you’re working your notice period, you should continue to make pension contributions unless your contract of employment says otherwise.

How much will I get in my compromise agreement?

It’s a complicated question to answer in an article because every situation is different. Give us a call and we’ll let you know what applies to you.

There is a legal minimum in the case of redundancy, otherwise, the amount you’ll get depends on your individual situation.

The first £30,000 of compensation and redundancy payments are tax-free, while tax and National Insurance are due on any PILON you may receive.

You will usually receive your settlement within 7 to 28 days after both you and your employer have signed the compromise agreement, together with any outstanding salary, holiday pay, commission or bonuses being paid through the company’s usual payroll system.

Need help?

For a FREE assessment of your case, call 0808 168 7288 or complete a Free Online Enquiry.

We have already helped thousands of people to win millions of pounds in compensation.

See what they say >

You have a choice of ways to pay, including ‘no win, no fee’.

Browse funding options