Newcastle Solicitors

NEWCASTLE  COMPROMISE AGREEMENTS

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 are compromise agreements used in redundancy situations?

Compromise agreements are being increasingly used by employers in redundancy situations as a mechanism for preventing any future claims arising out of the redundancy.  For employers compromise agreements are a useful tool, especially if they have not fully or fairly complied with redundancy procedures. However they can still be used even where the redundancy is fair to give the employer a clean break between you and them. Remember by signing the compromise agreement the employee agrees that there is a ‘full and final’ settlement of all claims against the employer.

Can I/should I negotiate on the terms offered in the Compromise Agreement?

There are 2 aspects to this question, being:

As the Agreements are statutory and generally quite standardised (in order to make the Compromise Agreement valid and legally binding, it must include the vast majority of content included) there are few aspects of the wording which need to be changed/negotiated and/or which the Employer will generally agree to amend and/or delete

It is not unusual to seek to negotiate on the ex gratia payment, particularly if the employee has been offered an amount at the lower end of the likely range of ex gratia amounts.

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.