The purpose of a compromise agreement is to provide businesses and employees an alternative to costly employment tribunals by having an agreement which will settle any claims relating to dismissal or any other issues that may end the employment relationship in the workplace.
The agreement will usually state that the employee will not pursue any claims against the business in return for financial compensation. The agreement can also cover remuneration, holiday pay and any other payments from the date of dismissal to the signing of the agreement.
Why has it been offered to me?
A compromise agreement may be offered in numerous circumstances, and it is usually when your employment is coming to an end.
These agreements may be voluntarily offered by your employer to avoid a drawn-out disciplinary, performance or redundancy process, which can often be costly and time-consuming and lead to ongoing contention unless drawn to an early close.
A compromise agreement can also be used where there is a dispute with your employer – again as a means of bringing that dispute to a close. In other words, it becomes the document that sets out the final terms that have been negotiated against the threat of a legal claim against your employer.
Do I have to agree to the compromise agreement?
While an employee may have been open to the idea of an agreement, they are not legally required to accept the agreement and can turn it down. If they turn down the agreement, they are free to make a claim against a business.
This also means that a company will be required to proceed down the dismissal procedural route to be able to dismiss them. It’s important to note that you as the Employer will still need to follow all disciplinary procedures if you decide to pursue dismissal, as they can arise at a tribunal.
Important next step
Compromise agreement terms need to be fair and agreed to by both parties. As employees are required to receive independent legal advice under the Employment (Jersey) law 2003 and they will have to sign the agreement which must be witnessed by a Jersey lawyer. At Parslows, our employment specialists provide highly experienced services to advise you in relation to your compromise agreement and assist you in the negotiations with your employer.