Compromise agreements are commonly entered into when employers seek to terminate an employee’s employment. It is a legally binding agreement under which the employee generally agrees to settle potential claims in return for the employer agreeing to pay financial compensation. (This is not always the case – sometimes an employer may agree not to take certain steps in return for which an employee waives claims.) The agreement may also include other things of benefit to the employee, such as an agreed reference letter. In order for a compromise agreement to be binding, the law requires that the employee receives independent advice on the terms of the agreement.
We regularly draft compromise agreements for employers and negotiate the terms on behalf of employees.