5 Reasons Employers Like Compromise Agreements - Employment Law Glasgow

Compromise agreements terminate any employer- employee relationship. At Employment Law Glasgow we are seeing an increase in requests for advice on situations where employers need to consider downsizing with possible redundancies but find themselves concerned about making decisions that have employment law implications. Very often this leads to compromise agreements being considered. Why?

1.    Compromise agreements bring certainty. Before a compromise agreement becomes legally binding independent legal advice is required. Once the employee receives such advice and the agreement is signed by all parties there is no prospect of the employee claiming unfair dismissal.

2.    Compromise agreements prevent the need to go through a redundancy process which involves consultation and considerations of an employee’s general performance. Such processes can be time consuming and can lead to a downturn in performance in the workplace as staff realise there is the prospect of losing their employment.

3.    Compromise agreements are short legal documents that include a compensatory figure for the loss of employment law rights. This is calculated using a formula that looks at statutory redundancy entitlements, length of service, notice period etc and this provides the employer with certainty as to the cost they would have to pay to terminate employment rather than the uncertainty of a claim at an employment tribunal.

4.    Sometimes employees are actually happy to receive a compromise agreement! The compensation figure for loss of employment is an enhanced figure beyond statutory redundancy and the employee may be happy with what is proposed.

5.    Legal costs of drawing up compromise agreements are not prohibitive for the employer as they are relatively routine documents. The cost involved in paying for such agreements to be drawn up and thereafter the cost of paying for the employee to obtain legal advice on them (the employer usually pays for the employee to obtain such advice) are far less than the time and cost of defending claims at tribunal.

Our employment law solicitors have significant experience in this area and we advise employers and employees daily on such matters. For employees ouradvice is generally free as the employer meets te cost of advising on the compromise agreement. Contact us if you require help in this area.