WHAT DOES A COMPROMISE AGREEMENT CONTAIN?

A compromise agreement is usually a document of several pages, which outlines the terms of the agreement between the employer and employee.

If its purpose is to settle a dispute, perhaps over equal pay or discrimination, it is likely to give details of the compensation and/or assurances given by the employer. It will also detail acceptance of those terms by the employee and give an assurance that legal action will not be pursued over the issue in question. Both sides may agree to keep terms of the agreement confidential and this may be a clause in the agreement.

If the compromise agreement relates to redundancy, it will probably cover the termination reason and date, the details of the redundancy package and the date of payment. It will also detail the legal rights being signed away by the employee and will probably include a confidentiality clause to avoid bad publicity. It may also detail the reference which will be given to the redundant employee and any other issues considered important by the parties to the agreement.