Compromise Agreements: what are they?
Comments (0) This is a fairly common question. Basically a compromise agreement (aka termination or settlement agreement) is a legally binding contract between employer and employee whereby the employee accepts a financial package (usual elements include: compensation for loss of employment, notice monies, outplacement services provision, release of stock etc) in return for agreeing not to sue the employer for breach of contract, or unfair dismissal or for any discrimination related reason. The employee will also commonly agree to keep the agreement itself confidential and to say nothing about the employer’s trade secrets and affairs, amongst other requirements. In order to be legally binding the employee needs to take independent legal advice on the terms of the agreement from a qualified legal adviser – usually a solicitor. The employer will usually pay a contribution towards the cost of that advice to encourage the employee to get the advice.
