I am a one in ten – compromise agreements.

Are those lyrics still relevant?

Anyway, as of yesterday its first time on the brew for me in a long long time.

I am off to see a solicitor today to discuss compromise agreements, anyone on here have real experiencs of what I should be negotiating as part of my severance/ compromise agreement. I am a senior manager so I expect the discussions to take a while and they will not be involving ACAS/ unions etc.

Would depend on the circumstances?

Exit date, severance payment, confidentiality, returning the company’s property, any outstanding expenses, forfeiture of your right to taking any action against the company after you leave, etc.

I do not know what your line of work is, but if it is fairly normal then your solicitor may have a standard agreement for you and your company to use.

Blue-chip who I’d worked at for 5 years, plus decent appraisals etc.

I was on 3 months notice, but my contract stated that I couldn’t work for competitors (who were listed) for 6 months. That was my starting point.

And then any benefits that would occur in that time.

And then consider the tax (-/+) implications.

My aim was for a pay-off to equal my previous 12 months net income – which I got.

I agreed a non competitor clause for a significant uplift in severance pay after refusing their first offer. In the end after 4 years service I got around 18 months gross pay and the process took around two weeks. I was in a sales management position so the competitor thing was a big deal for them.

Non-competitor clauses are generally viewed as unenforcable. Neat trick to get paid for one if you can!

I did one a few years ago. Make sure you have someone with you who knows the ropes and is a good negotiator. Does you solicitor have this experience?

My experience – keep rejecting the money they offer and ask for more, point out how much it would cost them if this went to tribunal / court ( their legal costs would be high) Reject any non competition clause and tell them you will acccept a shorter time

Like any negotiation really but people experienced in it are invaluable. I ended up with nearly 6 months pay when actually entitled to 6 weeks – because my negotiating team ( me and t’missus) rand rings round them.

If they are offering a compromise agreement it will be because they know they are on dodgy ground – so the strength is with you. use it to your advantage. They want the agreement – make ’em pay!

If they are offering a compromise agreement it will be because they know they are on dodgy ground – so the strength is with you

That might be true, but it’s not always the case.

Companies also use comp. agreements when they don’t want the hassle of having to go through a formal procedure because these can take up to 6 months to do properly, especially if you’re a senior manager.

The comp. agreement is much quicker and in many ways tidier. The real benefit to the business is not having the disruption of a messy formal process, which can have many other adverse impacts on other people (morale etc). It doesn’t always mean they’ve done something wrong.

Bear in mind that the exposure of any business for wrongful dismissal is £50,000, i.e. that is the limit that they can be sued for. Of course, it’s very different if you’re claiming discrimination on the grounds of a ‘protected status’. If you’re male, white, straight and in your 20s, 30s or 40s then basically you’re screwed, because none of those attributes would likely be considered to have disadvantaged you in any way. So you’re at their mercy. Throw in one or two of the above mentioned features as contrary to the status quo and you’ve automatically got a much stronger negotiation position. The cost to the business of having someone being very disriptive during a painful exit, is also going to be much higher than £50k.

You can use this to inform your negotiation.

Remember that whatever they offer you first is not what they are willing to pay, but also remember that their first offer is not a million miles away from what they are willing to pay. The point here is that their first offer reflects to some degree, what it’s worth to them to have you accept the offer in the first place. If you get greedy and demand say 100% more, then they may just turn round and say, ‘well why would we agree to that? It will cost us far less to get taken to court!’

Non compete clauses are worthless, even more so the more general they are; they contravene the European Human Rights charter that says everyone has the right to work and earn a living and most non-compete clauses would prevent you from doing that.

My experience – keep rejecting the money they offer and ask for more, point out how much it would cost them if this went to tribunal / court ( their legal costs would be high) Reject any non competition clause and tell them you will acccept a shorter time

Is there much of a trend for non-competition clauses in nursing?

Non-competitor clauses are generally viewed as unenforcable

I’m in the process of recruiting someone who has one of these in his contract. Still waiting on legal confirmation but our view was that the clause was unenforceable (as it stops him from getting another job) unless they actually pay him for the period.

If they’re paying him then he’s still employed by them surely? Which is an interesting if not expensive way, of enforcing a non-compete clause!

If they’re paying him then he’s still employed by them surely?

In my experience that can be the case i.e. an extended period of gardening leave.

No experience in this area, but how do these situations arise?? One day your boss says to you ‘we want you to resign?’

Only had experience of redundancies where there didn’t seem to be any scope for negotiation

If they are offering a compromise agreement it will be because they know they are on dodgy ground – so the strength is with you

Our lot use them for every redundancy

uplink – it still applies – if the management are wanting to use a compromise agreement it must have some advantage for them – thus you have a lever in the negotiation.

Jambo – no non competition clause but it was still a compromise agreement.

Not trying to scaremonger or anything.

I have a bad experience with my Compromise Agreement.

Was promised 2months salary plus other monies I was owed, and didn’t have to workt he remainder of the month (but paid for it). Came to nearly £4k after tax etc. Which I ws happy with as I just wanted a couple of months off work then start something new.

compramise agreement also said that they would pay my solictior up to a total of £500 to read and explain it etc. Solicitor said they couldnt invoice them, so they would try to recoup the money for 30days then invoice me. Which I agreed to.

In the end, the company went under a week later. I didn’t get my last months wages, didn’t get any of the money promised and had to pay the solicitor myself.
I managed to get my wages and my overtime paid by the nice people at the insolvency office.

Got a job, and luckily the solictior was happy to wait until I got to a job before I started paying him.

Two years later I got a cheque from the administrators for 65p. Which I apparently only got due to my solictiors hounding the administrators for me.

The Director sold the assets to another company which a family member runs and he still has a huge involvement even though he isnt officially a director/investor etc etc. He has a habit of doing so. He is on business number 7 and he hasnt even hist 30years old yet.

No experience in this area, but how do these situations arise?? One day your boss says to you ‘we want you to resign?’

If they are done correctly they will start with:

‘This conversation takes place without prejudice. If you want to continue this conversation and hear what i have to offer, then in the event you decide not to accept the terms, everything said in the conversatino will be denied. Do you want to continue?’

Which is basically their way of saying, we know we’re breaking the law by forcing this upon you so you have to say you’re OK with it in order for us to continue.

Most people will have an inkling as to what is coming and will want to hear what the company has to offer.

One common way for them to arise is simply poor management. An individual is doing their job as best they think but the management above them does not agree. Unfortunately that person’s manager has not done anything to address the problem with their performance and the situation has got to a point where the issue has been allowed to continue for so long, that the level of performance in question has become defined as acceptable.

What this is protecting the employee against is the employer suddenly moving the goal posts because they want to get rid of that employee on the cheap, i.e. sacking them for poor performance, which is perfectly legitimate.

So since you’ve let the situation fester for so long and by default allowed it to be regarded as acceptable, you then have to go through a lengthy process of performance management; setting new targets, discussing ways in which the person can meet these, supporting them through that process, identifying what the person needs to change etc.

Given that the manager was so inept as to not address the basic problem in the first place, the chances of them executing this task well is zero, hence a compromise agreement is offered.

TJ, standard practice for my organisation is to use a compromise agreement. That way there’s no comeback for us.

As so often, your assertions are wide of the mark. You may have had an experience where you’ve been shafted by an employee, but for employers it is often the other way round; employees who are offered (significantly) enhanced redundancy terms, accept them, then allege all sorts of stuff after they’ve left.

You can leave without a comp agreement, but don’t expect the company to pay anything other than State minimum if you refuse to sign.

nickf – sorry – if there is an advantage to the employer to use a compromise agreement then that is a lever for you to use in negotiation.

“you want me to sign this? Whats in it for me”

I am also fairly sure the “sign the compromise agreement or face redundancy” is actually wrong legally.

In my experience (quite afew years in HR) compromise agreements are only offered because it’s a cheaper (and time is money) way of getting rid of people. Remember at the end of the agreement will be an undertaking by you not to take any legal action against the firm in relation to the termination of your contract. They are effective buying you off (which may well suit you as well).
So work out what it would cost the company to get rid of you legitimately(redundancy costs, pay in lieu, sick pay because folk often go off sick at the first sign of any disciplinary action, potential tribunal costs etc). Try for a settlement figure as close to that as possible and good luck.

TJ – I still don’t think your claim that if companies use compromise agreements “it will be because they know they are on dodgy ground” is valid, lots of companies do it to keep things simple

Nickf – it may be that they won’t budge – but it is a negotiation and a wise employee uses every weapon they have.

As both cbrsyd and geetee1972 state – its to managements advantage to use the compromise agreement – so that gives you a lever.

edit – Uplink – fair enough – change “dodgy ground” to – “to their advantage”.

nickf – sorry – if there is an advantage to the employer to use a compromise agreement then that is a lever for you to use in negotiation.

When we use them it’s to the individual and the companies mutual benefit – otherwise why would both parties sign? For example, having followed the correct processes, we may well have the option to dismiss someone for poor performance or misconduct but they might prefer another reason to be given officially. Or we as a company might want to make someone redundant from a role, but would rather not have the redundancy word associated with us – so would be willing to pay more to the employee in those circumstances.

epicsteve – does your company behave in a benign way? Give as much as they can? Its a very rare company that would do that.

The OP asked for experience and that was mine – i negotiated to 3 times the amount originally offered. Now I expect most companies are not as incompetent as that one but as others have said – the initial offer from the company is the starting point for negotiation.

epicsteve – does your company behave in a benign way? Give as much as they can? Its a very rare company that would do that.

It’s perfectly possible they do. There are plenty of companies out there with a very high degree of and investment in ’employer branding’; people want to work for them and consequently they get a competitive advantage from having better ‘talent’ (using the word as a noun not an adjective’.

The private sector has started to wake up to this idea and genuinely want to use it to their advantage so yes, they may be slightly more generous or they may just want to protect their reputation.

epicsteve – does your company behave in a benign way? Give as much as they can?

We won’t give us much as we can (we’re not stupid!) but we’ll pay more that we legally have to if we see a benefit (which we usually do). Our management team are generally pretty busy and their time is viewed as valuable so the reason we use compromise agreements is because it’s easier, not because it’s cheaper.

Senior management thinks that the value of our organisation is in it’s people so are very keen to be seen as a good employer, which is why we’ve invested a lot of time and money into IIP and external specialiast consultancy to put in place our development plans and review processes.

Fair enough epic steve – but as

We won’t give us much as we can (we’re not stupid!)

then surely there is room for the employee to negotiate the amount upwards? Thats all my point is. its to the managements advantage for whatever reason to use the compromise agreement so the question is “whats in it for me”

TJ does have a point. Easier will equal cheaper or at least, it will equal profit in some way shape or form and at some point. The management is measuring managers time as a cost, whether that be tangible or otherwise and it’s measuring impact on reputation and the ability to hire the best talent in a similar way.

So his point that it’s negotiable must be true to some degree.

Thank you Geetee.

It may well be that the companies HR are good and have not mucked up, the offer is generous and they are good negotiators – in which case you might not get very far – or it might be like my case were the management / HR were incompetent and had made a real horlicks of things and were rubbish negotiators – in which case you will get a lot out of it. I tripled their first offer.

The offer of a compromise agreement is the start of negotiations – not a take it or leave it offer.

Sometimes it can cover the business from commercial damage. In my case I had a number of commercially sensitive relationships, visibility of, and access to, a large ongoing pipeline of potential business and had I gone to our main competitor (which was highly likely) it would have impacted on my employer in quite a large way. My role was essentially made redundant but by buying my silence and inactivity for 6 months it worked out well for both parties as I had already secured a role elsewhere outside of, my then, industry. I gave my legal representative an idea of what I’d like and he exceeded my expectations by a large margin and for a fixed and reasonable fee.

and for the record, UB40s ‘I am a one in ten’ was not a song about dole queue statistics of the early eighties.

Sorry to quote reality at you TJ, but we have a very simple methodology for redundancy.

The person concerned will get their statutory minumum payment, which equates to a number of weeks, capped at a low weekly level (£300 per week or so, but I could be wrong).

As an enhancement, we disregard the cap, and pay people based on their full weekly salary equivalent. This is an additional benefit to the employee; in order to gain this benefit, they have to sign a compromise agreement.

There’s no negotiation; if they don’t want to sign, they simply get their redundancy pay capped at the government statutory level. Strangely, people seems prepared to sign. What we’re hoping to get from this is a reduction in the number of claims made by ex-employees. It appears to have worked.

Good for you if you managed to get more, but please don’t think that your case is the norm.

B.A.Nana – Member
and for the record, UB40s ‘I am a one in ten’ was not a song about dole queue statistics of the early eighties

What was it about then?

it certainly mentions the dole queue in the lyric

they contravene the European Human Rights charter that says everyone has the right to work and earn a living and most non-compete clauses would prevent you from doing that.

Do they? Surely not, you can still work in another field, or a smaller competitor that isn’t really a competitor/isn’t listed (depending on clause I suppose)?

Also as was said, a company/HR/your Manager will settle for a higher number than the initial one, but not one that they feel is ‘extortion’.

You need to (somehow) find out what kind of settlements they’ve given in the past. Worth waiting for their first ‘offer’.

Do they? Surely not, you can still work in another field, or a smaller competitor that isn’t really a competitor/isn’t listed (depending on clause I suppose)?

When I was working in music software, I had one that said roughly “I couldn’t work for a competitor”, that some idiot company tried to pretend meant basically that I couldn’t work for any company doing software that was in any way related to music or sound, rather than just their two or three actual competitors in the market making similar software. The problem is that once you claim that your clause covers a massively broad sector like that, you are obviously obstructing people’s ability to work. I think typically they just aren’t enforceable at all.

Some sectors have enforceable non-compete clauses though, because they pay people gardening leave during the non-competition phase. Some sales jobs do that, to stop people running off with customers.

Joe

It’s just generally about faceless lower class people or the unfortunates in life being treated as nothing more than numbers and statistics on sheets of paper.

Do they?

Most are so broadly worded as to preclude you from working at all. Even if they aren’t, the major competitors are likely to be the major employers in the sector.

The only time anyone manages to make that kind of thing stick is when the leaver has done something daft, and taken a copy of the contact list. Then you’re pinching the company’s data, and it’s a different matter.

nickf if your company is doing that then they are breaking the law – clearly and simply. Someone will latch on to it one day and sue the arse off them. Not just a civil matter but criminal.