Compromise agreement should i sign

Should you sign a compromise agreement? Posted on June 10, Compromise agreements are a tool for employers and employees to part ways on agreed terms. Once signed, it means both parties have agreed to the terms of the agreement and the nature in which their business relationship will end.

That being said, there should be a fair level of compensation on the table given employees are asked to forfeit their right to pursue a claim. What will the compromise agreement cover? Non-compete: This clause prohibits employees from making a direct and targeted approach for business against their employer, either under a new employer arrangement or in their own capacity. Can I refuse to sign? Posted in: Employment law.

Expert legal advice you can rely on, get in touch today:. If you do not understand any items, please contact us. Please let us know you are not a robot. Get in touch. The first thing to remember is that this happens frequently. Nothing is binding until the agreement has been agreed and signed by you. Settlement agreements are long and complicated documents in which you will be signing away important legal rights.

Take your time: get the best advice and make sure you are making the right decision. It is up to you whether to sign or not. A settlement agreement is a written contract between employer and employee.

It is designed to prevent employees from bringing claims against their company or employer, in return for a cash payment. In return, the employ ee is given some sort of enhanced payment. See our article for more information on getting a job after a settlement agreement. Settlement agreements may also be offered in any number of situations, such as during performance improvement programmes, a disciplinary process, or a tribunal claim.

The offer may arise when the employer feels there may be a risk of a legal claim being brought against them, but it may also be that they want a clean break in return for an enhanced redundancy payment.

A final settlement may be offered at any time during the redundancy process. However, provided the redundancy is legitimate, it will most likely be given to an employee once the process has been concluded.

By signing a settlement agreement, you are telling your employer that you are happy to leave the organisation. The alternative would be for your employer to dismiss you. Assess the situation and decide whether the employer could dismiss you fairly in any case. As an employee, you have the right to bring a claim against your employer if they act illegally or in breach of employment law. However, by agreeing to and signing a compromise agreement, you will no longer be able to sue your employer in a tribunal or court for any ongoing, potential or future claims, individually or as part of a group, unless the agreement specifies otherwise.

There are limited rights that should still be protected within the agreement, and when going through the process, a specialist like those at Thompsons NI will ensure these are included before anything is signed. However, how the payment is defined within the agreement is crucial and can make a difference as to whether the payment benefits from tax exemption.

Thompsons NI specialists will review this with you and make the necessary amendments to your agreement. You will have to pay tax and national insurance on payments which are considered as earnings, such as wages and holiday pay. As of 6 April , a compromise agreement needs to make it clear that either notice has been served or it needs to specify the amount of Post-Employment Notice Pay PENP that is payable. If the agreement makes no reference to notice pay, HMRC will treat part of the compensation payment as notice pay, and subject it to tax and national insurance.

Our specialists will ensure that the appropriate terms are used within the settlement agreement to protect the tax status of the payments. Your compromise agreement should specify a time limit for payment. Thompsons NI will ensure that the timescale included in your agreement is fair and reasonable. There is no legal obligation for an employer to provide an employment reference. For an employer to be legally obliged to give a reference, there must a relevant clause included in the agreement that confirms they will do this.

It should also stipulate how they will provide it and within what timescale. Compromise agreements usually include a confidentiality clause that prevents the agreement and terms being disclosed to third parties.

However, our specialists can ensure that the clause is not overly restrictive and that it is balanced in your favour to ensure you can discuss matters with relevant parties, such as prospective employers and your professional advisors.

This means you can still bring a claim in an employment tribunal. Most often it will be from a qualified lawyer, but it could also be a trade union rep or advice worker who are authorised to advise on settlement agreements. You can go to the county court to claim breach of contract.

Contact your nearest Citizens Advice for help. Skip to navigation Skip to content Skip to footer. Top links Housing benefit. Top links Template letter to raise a grievance at work. Top links Our pensions advice Write a letter to your creditors. Top links If you want a refund because of coronavirus Contact the consumer helpline Report to Trading Standards Problems with a used car Return faulty goods Buying a used car Your energy supply View all.

Housing Coronavirus - if you have problems with renting Renting privately Renting from the council or a housing association Homelessness Repairs in rented housing Renting a home Mortgage problems Discrimination in housing View all in Housing.

Family Living together, marriage and civil partnership How to separate Sorting out money Making agreements about your children If you were living together Death and wills Gender violence Children and young people View all in Family.