What is a Compromise Agreement?

A Compromise Agreement is akin to a no-fault divorce in that both parties (employer and employee) are agreeing to go their own ways and drop any prospect of subsequent litigation.  It is an unusual piece of legislation.  Through it an employee can agree to forego "compromise" his own statutory employment rights in return for monetary compensation.

The employment rights most often compromised relate to refraining subsequently from bringing, or otherwise withdrawing, a claim to an Employment Tribunal.

A correctly structured and signed Compromise Agreement will be legally binding on both parties.

There are strict and well-defined requirements to be fulfilled to ensure a Compromise Agreement is valid.

Very specifically, the employee MUST have taken specialist advice from someone who has appropriate insurance, for example a lawyer. The lawyer giving the advice is required to be one of the signatories to the agreement.  It is normal practice for the employer to pay for the employee's legal fees when consulting a suitably qualified lawyer.