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A Compromising Position

21.06.2013

It is often thought that Compromise Agreements are only relevant to situations where employment has been or is shortly to be terminated. It is true this is where they are most common but an employer and employee can enter into an agreement to settle claims in circumstances where employment is continuing.

Claims relating to contractual terms in the contract can be waived by entering into a contractual agreement. However, any agreement to settle or waive most statutory claims will be void unless it meets one of the exceptions. The two most commonly used are:

Compromise Agreements take many forms and can be from 2 to 34 pages. What is necessary is that:

Although it is common practice for the employer to pay a fixed contribution to the cost of the legal advice the employee receives it is not a necessary requirement of a valid agreement.

The government are currently proposing that this type of arrangement be renamed a settlement agreement, and that employers should be able to raise this issue without it being used as a claim for constructive dismissal by the employee.

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