Advantages and Disadvantages of a Compromise Agreement

Generally speaking, compromise agreements are a way for businesses to resolve an employment law dispute with an employee. They are usually offered in return for financial compensation. The aim of a compromise agreement is to bring legal closure to the issue as quickly as possible. They are typically used by businesses in relation to issues like gross misconduct, unfair dismissal, victimisation or discrimination.

It is important for both parties to understand the advantages and disadvantages of a constructive dismissal before agreeing to sign one. This is to ensure that the terms and conditions of the agreement are fair and reasonable and that they are not giving up something they may be entitled to.

The first advantage is that a compromise agreement is often a quicker and cheaper option than going to tribunal. The cost of a tribunal case can be significantly higher and if the matter goes to trial it can take months to get a hearing date and even longer for a decision to be made.

A compromise agreement is a legally binding contract and, therefore, it should be drafted carefully to comply with the Employment (Jersey) Law 2003. It should include the following stipulations:

Consideration. This is normally monetary and it can be either a fixed amount or a percentage of the employee’s earnings. The employer must also contribute to any legal fees incurred by the employee, unless the employee is a member of a trade union and their union has agreed to pay for their representation. The agreement must be in writing and must relate to a specific proceeding or complaint.

Understanding the Advantages and Disadvantages of a Compromise Agreement

The employee must be legally represented and the agreement should identify any independent advisors, such as a trade union representative or a lawyer. The independent advisors should be able to provide a certificate that they have insurance covering any claims from the employee.

There are certain issues that the agreement cannot waive claims for, such as breach of contract. However, a waiver of contractual claims is acceptable provided that the clause is worded correctly and satisfies the other statutory requirements constructive dismissal lawyer near me.

A key disadvantage of a compromise agreement is that it can limit the employee’s future prospects in the workplace. This can be particularly problematic for those who are seeking to progress their career within an industry. It is therefore crucial for the employee to seek independent legal advice on a proposed compromise agreement before agreeing to it.

Compromise agreements are not ideal for all situations but they can be very useful for businesses in resolving disputes with employees quickly and cheaply. They can also protect the identity of the parties involved and help keep matters private. In addition, they can be a good way for employees to avoid reputational damage if the dispute is made public. However, if you’re in any doubt about the circumstances that would justify a compromise agreement, you should always speak to an experienced employment lawyer. Giambrone & Partners can provide first-class employment advice to both employers and employees.