It is highly advisable that you are fully up to speed with the terms of your Compromise Agreement because there are other provisions besides compensation which could potentially affect your financial position after you have left your job. They include:
• An employer’s initial offer is likely to include more favourable terms than required by law and if a disagreement arises they may decide to resort to the minimum legal sum prescribed by statute
• Signing the contract will normally involve an employee forfeiting the ability to bring a claim against the employer to the Employment Tribunal or any other court – however sometimes the contractual arrangements only cover certain topics, such as redundancy
• Depending on which potential claims the employee is asked to give up the right to make upon signing a compromise agreement, they may still retain the right to make other claims, such as in relation to discrimination
• An employee is not required to sign the Compromise Agreement if they are not satisfied with its terms – the offer can be rejected and the draft agreement returned to the employer for further negotiation
What about my employee benefits?
It is imperative that your employment law Solicitor checks your compromise agreement to ensure that any bonuses and commission you are entitled to area are to be paid in full. These amounts should also be clearly stated in your Compromise Agreement.
Any pension contributions should continue during your notice period unless your contract says otherwise. If an arrangement is reached with your employer for a lump sum to be paid into your pension as part of the Compromise Agreement, you may be entitled to a tax-free payment. Your Solicitor will be able to advise you regarding any pension losses, especially if you have a final salary pension.
It is also important to determine your position regarding pension benefits which can be done prior to leaving your employment.