In November 2011 the Government published its Response to Resolving Workplace Disputes intended in part to ensure that both employers and employees have a greater chance of resolving disputes as quickly and smoothly as possible.
Following on from this initiative, the government announced proposals in April 2012 for employment law reform which encompass the renaming of Compromise Agreements to Settlement Agreements with effect from July 29 2013. It has been concluded that the word ‘compromise’ denotes inequality and compromise in the employer’s favour not their departing employee. However, ‘Compromise Agreement’ has become a familiar term which is likely to remain in use amongst employment law solicitors, employees and employees for some time to come, especially as ‘Settlement Agreement’ is already in existence as a term used mainly relating to divorce disputes.
Regardless of what these documents are called, Compromise or Settlement Agreements are governed by UK employment law statutes and designed to protect a departing employee from unwittingly losing rights that they may not fully understand. Having said that, the majority of employees will cover the cost of independent legal advice for an employee as it is in their interests to ensure that the Compromise Agreement is valid.
Whether or not the term ‘Settlement Agreement’ will “emphasise the benefits they can offer as a way of resolving and bringing finality to disputes” remains to be seen.
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We will advise you on the terms of the Compromise Agreement and the financial settlement on offer – wherever you are located throughout England and Wales we can assist with your enquiry.