When an employee either threatens to file a statutory claim against an employer, or actually files one, the employer and the employee have the option of reaching a compromise agreement outside of a court of law in the United Kingdom. A compromise agreement is a document which states that the employer will compensate the employee monetarily for the issue, and that the employee will either drop or avoid filing the charges in return.
Their are very strict legal regulations regarding how a compromise agreement can be undergone. As with any legal agreement, it must be written, not verbal. However, unlike most employee-employer contracts, the employee is required to seek the advice of a professional adviser before signing the document. The adviser must be independent of the employer, and have professional indemnity insurance.
Compromise agreements must specifically refer to the violations in question. The language of the agreement can not be a broad statement that the employee will never file a statutory claim against the employer, or that any such claims will be waived. It must specifically address the facts of the case. In order for it to protect the employer against possible claims that the employee is unaware of, these claims must be specifically mentioned in the contract. The contract will often be expanded to include waivers for any breaches of contract that might have occurred as well.
A compromise agreement can be used in order to protect the employer from the costs of going to court. The employee benefits because they avoid the possibility of losing the court battle and walking away with nothing.
