In the employment context a ‘Compromise Agreement’ can be used to bring an employee’s contract to an end. They are used to settle disputes and also where an employee is being made redundant where the employer wants to ensure that there will be no allegation that the decision was unfair or discriminatory.
For a Compromise Agreement to be binding the employee must be advised by a suitably qualified person, a solicitor or union representative, who will provide a certificate. Employers will pay at least a contribution to the legal fees incurred by the employee in these circumstances. The adviser’s job is to explain to the employee the implications of the Agreement, but he or she can also be asked to provide separate advice on whether the settlement package is appropriate and one which the employee should accept.
Compromise Agreements typically contain restrictions preventing the employee for telling anyone about the terms of the settlement or publishing criticism of the employer and reminding them that information they have about the employer remains confidential. These aspects of such agreements have developed and sometimes gotten out of control, and become the subject of controversy and criticism in the form of Non-Disclosure Agreement (NDAs) which focus on restraining whistle-blowers and victims of sexual harassment.