What is a compromise agreement and what is the benefit you (and your employer) have to use it? A transaction agreement (formerly known as a compromise agreement) is a legally binding agreement between you and your employer. This generally provides for an employer`s severance pay in exchange for your consent not to make claims in court or court. As a general rule, the employer requires that you keep the conditions, such as. B the amount and circumstances of termination of your contract. We will be able to get the stress out of this difficult time for you by explaining what claims are compromising you and what the transaction contract really means. The protection of confidential information is generally essential for a company and, therefore, compromise agreements often contain confidentiality clauses, for example, the employee agrees: unless ACAS has been involved and agreed to a COT3 count, cot3 being the name of the form used, compromise agreements are the only way in which a worker can waive legal rights. , such as dismissal, discrimination or the right to severance pay.  The contract is valid only if (i) it is submitted in writing and (ii) the worker has received independent legal assistance from a competent advisor with professional liability insurance. An employee cannot compromise potential future claims, although claims already created and unknown to the employee may be made.
The Employment Rights Act of 1996 provides for the terms of validity of compromise agreements in Section 203. The Equal Opportunity Act 2010 also regulates the validity of compromise agreements, but a possible mis-formulation may have had an impact on the scope of compromise agreements to resolve discrimination complaints. In order to make the transaction contract legally applicable, the worker should receive independent legal advice on the agreement. This means that the worker must have the agreement declared by an independent lawyer. As a general rule, the employer pays the costs of the worker who explains the transaction contract. Therefore, if this is viewed on a two-handed basis, the employer normally pays the worker some kind of compensation as part of the compromise agreement. Some kind of consideration does not necessarily mean monetary value, but what the worker receives is generally compensation and what the employer receives is an agreement that it is the end of the case and that the worker will not make claims in the labour tribunal or in court against the employer. What it does provides for a net and net outfing for both parties. The transaction agreement terminates all potential and ongoing claims against your employer. In the future, they will not be able to claim compensation in a civil or labour tribunal.