Compromise agreement

Compromise agreement

In the United Kingdom, a compromise agreement is a specific type of contract, regulated by statute, between an employer and its employee (or ex-employee) under which the employee receives a negotiated financial sum in exchange for agreeing that he or she will have no further claim against the employer as a result of any breach of a statutory obligation by the employer.

Except when ACAS have been involved and arranged a COT3 settlement, compromise agreements are the only means whereby an employee can waive statutory claims such as unfair dismissal, discrimination or redundancy. The agreement will only be valid where (i) it is in writing and (ii) the employee has received independent advice from a solicitor who has professional indemnity insurance. An employee cannot compromise potential future claims, though claims that have already arisen, unknown to the employee, can be waived.

In practice, a compromise agreement will also contain a waiver of any claim for breach of contract as well as statutory claims, though such a waiver does not need to satisfy the same requirements in order to be valid.

Each agreement must be tailored to meet the facts and circumstances of the case. It is therefore impossible to adopt a one size fits all approach to drafting of a compromise agreement.

The advantage for the employer is that they are able to draw a line under an employee's departure and feel protected from future claims. The advantage for the employee is the financial sum received in return.

See also


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  • compromise agreement — agreement which contains some desires of both sides, conciliatory agreement …   English contemporary dictionary

  • COMPROMISE — (Heb. פְּשָׁרָה, pesharah; apparently derived from the term pesher, solution, Eccles. 8:1), deciding a civil law dispute (dinei mamonot) by the court or an arbitral body, through the exercise of their discretion and not according to the laws… …   Encyclopedia of Judaism

  • compromise — com·pro·mise 1 n: an agreement resolving differences by mutual concessions esp. to prevent or end a lawsuit compromise 2 vb mised, mis·ing vt: to resolve or dispose of by a compromise cases in which a dispute is compromised E. A. Farnsworth and W …   Law dictionary

  • agreement — [[t]əgri͟ːmənt[/t]] ♦♦ agreements 1) N COUNT: oft N to inf, N prep An agreement is a formal decision about future action which is made by two or more countries, groups, or people. It looks as though a compromise agreement has now been reached...… …   English dictionary

  • compromise and settlement — A compromise agreement followed by the performance of the promises contained in the agreement. 15 Am J2d Compr § 1 …   Ballentine's law dictionary

  • agreement — a‧gree‧ment [əˈgriːmənt] noun [countable] 1. an arrangement or promise to do something, made by two or more people or organizations: • Under the agreement, the company will distribute our products in North America. • What happens if the warring… …   Financial and business terms

  • agreement — agree·ment n 1 a: the act or fact of agreeing by mutual agreement b: unity of opinion, understanding, or intent; esp: the mutual assent of contracting parties to the same terms if they reach agreement ◇ Under common law, agreement is a necessary… …   Law dictionary

  • Compromise — Com pro*mise, n. [F. compromis, fr. L. compromissum a mutual promise to abide by the decision of an arbiter, fr. compromittere to make such a promise; com + promittere to promise. See {Promise}.] 1. A mutual agreement to refer matters in dispute… …   The Collaborative International Dictionary of English

  • Compromise (in Canon Law) — • In a general sense, a mutual promise or contract of two parties in controversy to refer their differences to the decision of arbitrators Catholic Encyclopedia. Kevin Knight. 2006. Compromise (in Canon Law)     Compromise …   Catholic encyclopedia

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