Relaunch Your Career

A compromise agreement will usually cover the following things:

• Any requirement to give notice, or how your contractual notice period is going to be dealt with, including any ‘payment in lieu’ of notice
• What money you are receiving, and what for. This will include any remaining pay, holiday pay, redundancy pay, and how much of it will be paid free of tax under redundancy rules
• A statement indemnifying your employer against any future tax liability. This means that, if any tax becomes payable on your settlement at a later date, you agree to pay it (this is usual).
• A confidentiality agreement covering:
  – the agreement itself (its terms, and sometimes its existence)
  – any trade secrets or sensitive business information belonging to the employer
  – an agreement not to make any derogatory comments about the employer (employees should ask for this to be mutual)
• Any restrictive covenants that were part of your original contract of employment, such as working for competitors or taking clients. If any of these appear to be new or different, you should seek specific advice
• A statement that the agreement is a ‘full and final’ settlement of any claims you may have against your employer
• A long list of the statutes under which you agree not to bring a claim, which will include all of the main discrimination legislation.

What cannot be included in a compromise agreement?

A compromise agreement specifically cannot waive your rights to claim where there has been a failure to inform and consult on collective redundancies, or on a TUPE arrangement. TUPE refers to the Transfer of Undertakings (Protection of Employment) Regulations 2006, under which employees may be transferred to a new employer as part of a takeover or outsourcing deal.