Q&A - Should I sign a Compromise Agreement offered by my employer?

Q: I started my job in 2012. Last year the boss’s nephew joined the business, doing the same job as me. In fact I trained him up. Next thing was the business wasn’t doing so well. Then when I went back after the Christmas holidays I was called in and told they were going to have to let me go.

When I asked if anyone else was going they said no, but they would see me ok and if I signed this settlement agreement they would pay me more than the usual redundancy money. They’ve given me two weeks to think about it. The extra money would be useful but I’m a bit peeved that I’ve been there longer than the boss’s nephew and he gets to stay. Should I sign this agreement?

A: Settlement agreements are legally binding contracts that waive an individual's rights to make a claim covered by the agreement. They are often used where an employer wants to terminate an employee’s employment without proper reason or procedure. There is often an ‘extra payment’ involved to compensate the employee for giving up their rights to take the employer to an Employment Tribunal.

A settlement agreement is only binding if you have received independent legal advice regarding the content and its impact upon your legal rights. Your employer will normally pay for this. The legal advisor must sign a special certificate to confirm that you have been given proper advice. Until then, the offer may be withdrawn at any time.

Depending on the circumstances a lawyer may be able to negotiate more favourable terms, such as extra money or an agreed reference. You should consult a reputable employment solicitor for advice before accepting any offer.

(Article published 06/02/2017)  

Robert Williams

Robert Williams

Partner and Complaints Handler

Partner and Head of the Civil Litigation, Personal Injury and Dispute Resolution team in Wrexham