Croydon Solicitors

CROYDON COMPROMISE AGREEMENT FAQS

What does “without prejudice & subject to contract” mean?

The words “without prejudice” when incorporated onto any letter or document are designed to prevent a letter or document being shown to a Court or Tribunal. In other words the words are incorporated to enable a party to negotiate without fear of compromising his/her or it’s position in the event negotiations fail. Compromise agreements are consequently offered on a without prejudice & subject to contract basis until they are signed by both parties, when they become open, binding and enforceable agreements which can be produced in court or Tribunal for enforcement purposes (which is rare).

Why has the employer set a deadline for the Agreement to be signed?

This is generally a tactic by the employer to ensure that the Agreement is concluded rapidly. Whilst any deadline should not be ignored, in practice, many employers will still agree to conclude the Compromise Agreement even if there is a delay due to negotiation or stand off between the parties resulting in the deadline passing.

Can I tell anyone about the Compromise Agreement?

Nearly all Compromise Agreements include a standard confidentiality agreement. Sometimes this only covers the terms of the amount offered in the Agreement. However, in some cases it covers the existence of a Compromise Agreement which means you must not tell anyone that this is the way in which you have agreed to terminate your contract. Usually you can agree exceptions to this rule so it does not apply to immediate family, spouse and professional advisers. Where people are aware that you have a dispute or claim against your employer, it is important to look at what sort of confidentiality agreement has been offered to see if this is appropriate.

When will I receive my money?

Once all parties have signed a Compromise Agreement, compensation is usually paid within 7-21 days. However, certain payments will be made through the payroll on the usual payroll date such as outstanding salary and accrued holiday and bonuses or commission payments.

Possible Claims After Signing a Compromise Agreement

As a rule, there are only three types of claim that can still be made after a compromise agreement has been signed. These are:

1. Personal Injury – This type of claim is generally still allowed, excepting claims for injuries that were already existing at the time the agreement was signed. If the termination was due to absence for stress or depression, it is unlikely that the claim would be allowed.

2. Pension Rights – A claim for accrued pension rights should still be possible.

3. Breach of Contract – If your employer breached the terms and conditions outlined in the agreement.

How long will it take?

It is be possible to sign off the agreement on the day we meet. However if we do need to liaise with your employer, either on the wording of the agreement or the amount of money being offered, most agreements will be sorted out within five to ten days.

Is there any chance the employer will withdraw the offer entirely?

This is possible until the agreement is signed and a deadline for a compromise agreement to be concluded is often part of the offer made. Withdrawal of the offer is sometime threatened but generally does not occur unless there is real friction. However, no absolute guarantee can be offered that the agreement will not be withdrawn.

What are the possible pitfalls and/or negotiating points on compromise agreements ?

These include :-

•             It may be possible for part of the payments to be paid in a more tax efficient manner. The first £30,000 can possibly be paid without deductions as long as it is not paid as part of a contractual benefit.

•             The offer may look good, but when you take into account the sums the employer has to pay you anyway (including statutory redundancy payments, holiday and notice) it may be rather less generous than you initially suppose.

•             The agreement may for example ask you to sign away valuable benefits such as bonus, car, medical insurance, commission or the right to exercise share options

•             It’s often advisable to get a suitable reference expressly agreed and attached to a compromise agreement..

•             The agreement may impose restrictions on what work you can take up after you leave. Alternatively the post termination restrictions in your employment contract may remain enforceable.