Compromise Agreements - A Simple Explanation

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Employer/employee relationships don't always work out and for one reason or another the employment relationship must be terminated.

The circumstances might be agreeable or contentious. Redundancy, in particular, is often the reason for making a compromise agreement. The main point of the agreement is that when an employee leaves the company, the parting can be achieved with employment ending on agreed terms.

Protection for the employer is assured with a compromise agreement in place which is why it can be a valued document to obtain. Any further future claims the employee could otherwise make will be prevented. This of course is a great peace of mind for the employer; it means a former employee cannot start bringing claims against an employer in a court or tribunal.

A compromise agreement can be offered to a departing employee, before they leave, or after employment has been ceased. The important thing to get right at this stage is to insert the words: Without Prejudice. Sounds a little fierce? Well, it isn't because if the compromise agreement is not accepted, it means the terms of the agreement cannot be used as evidence in any later proceeding.

This might be beneficial for the employer but really both parties should be protected? Yes! That is one other valuable reason for making a compromise agreement.

The employee has the guarentee of a compensation amount. It is usual for the employee to enter into the compromise agreement to obtain these costs. It is limited to a specific amount but it is customary, although not a legal requirement, for an employer to agree to pay the legal costs incurred by the employee. In doing this, it makes sure that the employer is treated fairly and the employee does not start making ridiculous demands. So that the dispute is settled legally and to avoid any future complications, it is sensible that the employer thinks of a reasonable payment figure for the employee.

Drawing up a legal compromise agreement is a sensible decision; it offers a simple precaution, avoiding costs of tribunal proceedings that could occur at a later date.

To be valid, a compromise agreement must be in writing and specify the claims being settled. In addition, the employee should seek independent legal advice from specialist compromise agreement solicitors. These solicitors will provide good advice upon what terms of acceptance to use and they will make sure that the agreement satisfies any applicable regulations.

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Tim Bishop has 5497 articles online and 3 fans

If you need specialist compromise agreement solicitors then contact Bonallack & Bishop today. They are a firm experienced in advising on redundancy compromise agreements. Tim Bishop is senior partner at the firm, responsible for all major strategic decisions. He has grown the firm by 1000% in 13 years and sees himself as a businessman who owns a law firm.

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Compromise Agreements - A Simple Explanation

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This article was published on 2010/09/21