I am a one in ten – compromise agreements.

nickf if your company is doing that then they are breaking the law – clearly and simply.

Why is that, given the legal requirements would be met by their standard offer?

I’m not saying it’s ethical – just not as far as I can see illegal. The employee can either have the statutory minimum or can choose to take a higher level of payment in reduce for signing a compromise agreement – what’s illegal about that.

How is it breaking the law? Surely if you’re offered two situations, one is that you leave with a compromise agreement and cash in pocket and the other is statutory redundancy you have a choice. If they say “Take the compromise agreement or we’ll dismiss you for gross misconduct (or other trumped up instant leaving method)” then that’s obviously not legal.

My last employer said “We’re going to make you redundant, here’s the compromise agreement, here’s what we were thinking about”. I gather from colleagues who went into legal proceedings with the firm that they didn’t get the same level of consideration I did (bonus, extra holiday, training courses during my wind-down) but that the basic deal was the same. I don’t think that was illegal, just the compromise agreement got the company something, and got me something.

What epicsteve said…

I had one. Not because firm doing anything dodgy, just standard practice in redundancies with reasonable payoffs I think.

Four weeks pay per year of service would be a good place to start, or maybe start at six and settle at four.

If you’re representing yourself, at least get an employment solicitor to read the agreement and advise you. You should ask companuy to pay for this.

No reason senior management can’t have a union rep present, unless you;re not a union member of course.

Why is that, given the legal requirements would be met by their standard offer?

Because when you approach someone with a compromise agreement, you’re bascally saying the outcome is already decided, and one way or another that person will be removed from the business.

You can’t do that, it’s wrongful dismissal. You have to have a good reason for sacking someone and that will always take time to establish through a formal procedure.

Compromise agreements are basically shorthand for ‘we want you to sign away your rights to sue us for wrongful dismissal (or worse) and in return we’ll give you more money than you might otherwise expect from either a performance management followed by dismissal or redundancy process’.

‘we want you to sign away your rights to sue us for wrongful dismissal (or worse) and in return we’ll give you more money than you might otherwise expect from either a performance management followed by dismissal or redundancy process’.

True enough, but you could choose not sign it and then still go to a tribunal for unfair dismissal at a later date?

its just unfair dismissal – and thats only the civil side

you are not allowed to state – “sign the compromise agreement or face redundancy” Your post is either redundant or its not. so if you are told sign the compromise agreement or face redundancy and refuse to sign then get made reduundant then its unfair selection process for redundancy – unfair dismissal without any defence possible

There are also possible criminal charges but I can’t remember what – relating to duress and unfair contract terms and stuff. Basically you are using threats to make someone sign away their rights.

You must have a solicitor advise you and your company must pay for this – legal requirement.

True enough, but you could choose not sign it and then still go to a tribunal for unfair dismissal at a later date?

Correct, which is why when you want to go down the compromise road, you have to start the conversation with ‘this conversation takes place without prejudice, everything we discuss will be denied by the company should you choose not to agree to the terms I have to offer’.

In a tribunal it would end up as your word against the company’s.

In the event that the person does not agree to the terms you offer them, then the company has to go through the formal process of dismissing you, most likely on the grounds of poor performance.

That will always end up with your dismissal because the law is vague enough to allow this to happen. It’s just that it will take time. Upwards of 6 months for a long serving employee. It takes this long because otherwise it could be easily shown to be constructive dissmisal.

I’m still not seeing the illegality :-S

So, you’re offered a compromise agreement (we presume on relatively generous terms) and you either accept or not. If you don’t, a little way down the line you are made redundant on spurious grounds which you can then still take the employer to tribunal an argue the toss. Surely if they chose not to offer a you a compromise agreement, and all other factirs are equal between the two situations, you simply end up at the tribunal a few weeks earlier?

The illegality is the use of a threat to make you sign.

“sign this or be made redundant” This is automatically unfair dismissal. No defence possible at tribunal and it is also coercion using threats to gain advantage which is where the criminality comes in.

I actually doubt the company is doing this – it would show such outstanding incompetence on behalf of HR to do so.

‘this conversation takes place without prejudice, everything we discuss will be denied by the company should you choose not to agree to the terms I have to offer’.

Do you really try to do this? This is why you always have a witness with you. Thats outrageously bad practice.

“without predjudice” is normally taken as meaning nothing is decided yet

you are not allowed to state – “sign the compromise agreement or face redundancy”

That’s not how you’d state it though. You’d follow all the necessary process for making them aware that their role is being considered for redundancy and the consultation period has been started. Once they’ve been informed of that you’d then make them aware that there is a compromise option should they wish to pursue it, but that it’s by no means mandatory.

No-one believes in the consultation process anyway so in my experience they’ll usually take any additional cash that’s on offer. I once worked for a company that was doing well until bought over by a US company who then almost immediate merged with another US company. The resulting mess then decided that our new aquisition was no longer required (despite some of the offices including mine being profitable) and bulleted everyone over a couple of phases. The legal process was followed, and the legal minimum payments were made – nearly all the staff who were notified of impending redundancy (which I unfortunately had to do, despite facing redundancy myself) left that day and never came back. The only ones who didn’t were a small group, including myself, who came to a bit of a side deal where we were able to take our redundancy payments but keep most of the customer contracts and set-up our own company out of the ashes.

“without predjudice” is normally taken as meaning nothing is decided yet

It means that the party saying it intends that it’s communication cannot be later referred to in court. (Whether it actually can or not is another matter, I suspect not).

Fair enough Al.

Epic steve – you are probably right but even so they are on pretty sticky ground and it would be very easy to make the case that it was coercion. If you sing a compromise agreement you have not been nmade redundant – so if the only folk that are being made redundant are those who did not sign…….?

That is not what nickf claimed however

nickf – Member
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.

If I was advising someone who was offered that deal I would be rubbing my hands with glee because I know I would have a very strong hand to take them to the cleaners.

Epic steve – you are probably right but even so they are on pretty sticky ground and it would be very easy to make the case that it was coercion. If you sing a compromise agreement you have not been nmade redundant – so if the only folk that are being made redundant are those who did not sign…….?

They are not on sticky ground if they are following due process, if they decide to offer employees different options that is perfectly within the law providing you have followed due process and are paying at least the statutory minimum.

NickF was merely pointing out how his company acts, his description is quite likely to be incomplete because he didn’t need to go into all the details to make his point – such brevity should be applauded. That of course, does not stop TJ assuming the worst as always.

If I was advising someone who was offered that deal I would be rubbing my hands with glee because I know I would have a very strong hand to take them to the cleaners.

But that is not going to happen is it? Because you are not qualified to.

As the OP thanks for all the comments and discussion above it makes for interesting reading.

Having been on both sides of the fence with compromise agreements I see the advantages and disadvantages of them for both parties.

If done fairly and “generously” by the company the employee can get a decent pay off to walk out of what can be a difficult and non-enjoyable working environment. Then get a break whilst looking for their next job. The company then gets a clean efficient break from that employee. Both parties then move on.

Done badly they can be a poor excuse for getting someone out the door with minimum fuss and expense to the company. If said company plays the strong hand they can often get away with much less payment than they ought to.

It depends a lot on the seniority of the position, the company, and the business they operate within.

Anyway I hope I am entering into the former, I will let you know how it goes in broad terms since confidentiallity is a big part of said agreeements as said above.

Mefty – both me and my missus have done a fair few of this sort of thing representing and advising people. Have you? Yes neither of us are qualified solicitors so any agreement needs to go past one.

We know the law and regulations on it fairly well. Hence when put in that position myself we were able to take the company to the cleaners as they attempted to do what you sem to think is OK.

You simply cannot have a choice of compromise agreement or redundancy. Any redundancy done under those circumstances is an unfair dismissal with no possiblity of defense.

Your post is either redundant or it is not. It cannot be redundant only if you refuse a compromise agreement. If the only people who are made redundant are those who refuse a compromise agreement then again – its clear cut unfair dismissal.

Your post is either redundant or it is not.

Well I thought Mefty was making a reasonable point, so his post isn’t really redundant…..

Oh hang on, I see what you mean. 😳

TJ I see your point and technically you’re right, but I think the reason this is still being debated is because there is what the law says should happen and then there is what happens in the real world.

For example, what the law says, and what is in peoples’ heads are often two different things, which is to some degree why the law exists in the first place.
TJ you, admirably, approach this subject not only from the point of view of the law, but also from what’s in your head, i.e. what you obviously believe in as a matter of principle. I think sometimes your arguments loose others because you tend to combine law and morality/ethics, which I often applauded, though not always. When I am not there applauding you though, it’s not because I don’t agree with your statements of fact, but rather the perspective from which you’re interpreting and applying them.

Of course your job can be either redundant or compromised if for no other reason than human judgement is always compromised and managers make bad decisions as much as they make good ones. The fact that they are the ones running the company, to a certain degree, gives some legitimacy to those flawed opinions and the fact that they are flawed means we need a back up plan to protect people, which is what the law is for.

Does that makes sense or did I drink too much wine with my meal? It was our anniversary so we’ve been out for a very nice dinner.

Makes sense GeeTee and you clearly know your stuff. It is also that I approach this from the point of view of advising and defending workers not as a manager. Its a different point of view to most on the thread

for sure companies will do this and get away with it most of the time – just now and then they will come up against someone stubborn who knows the legal shizzle – and then they come unstuck.

This is why I ended up with a lot more (15 times more) than I was entitled to – and nearly tripled their first offer

A compromise agreement is a legally binding agreement FOLLOWING the termination of your employment. So your job is either redundant or it is not. If it’s not redundant you must be being dismissed for some other reason (conduct, capabilty etc).
So the question is whether your employer is offering you a compromise agreement on the pretext that you are in a redundant post when all along they intend replacing you when you leave (in which case the post is not redundant). If that is the case you are effectively being sacked for some other reason but your employer doesn’t want (or hasn’t the time) to take the necessary steps (following procedure, warnings, reviews etc) to dismiss you legally. They have obviously calculated making you a redundancy payment will be cheaper in the long run than sacking legally for another reason such as conduct or capability.
Only you know the answer to the question but if redundancy is not the real reason for your dismissal I think it gives you a bigger lever to negotiate any settlement.
I would recommend you consulting an employment law specialist solicitor (or your TU) before I agreed anything with your employer.

At its simplest, refusing to sign [ a compromise agreement] means that there is no agreement between you and your employer, and you are free to make a claim to the employment tribunal (which must be within 3 months of your termination date). In redundancy cases, however, this could mean that your employer would refuse to pay you the full enhanced package and will instead pay the minimum state entitlement. In non-redundancy cases, what you are putting in jeopardy is the ex-gratia payment being offered.

Link here

It is not only me who seems to think it is ok.

mefty – Member

………. and you are free to make a claim to the employment tribunal

And if the employer is offering “sign this or be made redundant” you will win.

Nothing on that link contradicts this.

Read what Geetee said.

Its very simple and straightforward.

TJ, as usual you’re spouting off on something you know nothing of, other than perhaps as a one-time participant. This does not make you any sort of an expert.

I guarantee that what my company does is legal, and we have written advice to that effect from employment lawyers. Real ones, who deal with this stuff for a living.

If you have a differing legal opinion (i.e. not just an assertion) which is based on fact (you know, quoting actual written law) then I’d be very interested to see it.

I’ll be waiting to see it, but I expect there’ll just be the usual half-baked bluster.

TandemJeremy – Member
And if the employer is offering “sign this or be made redundant” you will win.

My last employer said “You are being made redundant, however we have some options available”. We’d bought another company and reasonable sized parts of both were being made redundant as the “best” parts of each were chosen from the technology side of things. My team was one of the ones being dumped (over simplified obviously).

The compromise was that I assisted with the transition, made sure there was a clean handover of any responsibilities transferred and in return I got a bunch of extra stuff. Some colleagues chose to leave immediately and didn’t get the extra parts on offer for the handover. The company got something from me they didn’t get from others (an ordered departure, no bad blood etc) and I got an extra 20% on top of what I would have had.

Whilst I’m sure SOME companies use this tactic as a way to bully staff, my experience was 100% positive and although the company I left was badly run and made some VERY odd decisions, I really can’t complain about how they treated me.

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.

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.

Prior to his post above, here are nickf posts, nowhere in them does he say “sign this or be made redundant” does he, what he says is completely in line with my earlier post. As usual you incorrectly read something in that simply is not there.

Ok. All employers are benign and never get this wrong, there is never any point in negotiating, Its quite ok to put pressure on people to sign away their rights, its pointless going to a tribunal.

All emplyees need to do is bend over and be shafted. Then all is good in the world!

Why do you think nickfs company is so keen to get people to sign – as he states its to reduce claims from ex employees – what claims – unfair dismissal ones because what they are doing is unfair dismissal. If they were dismissing fairly then there is no claim possible.

I guarantee that what my company does is legal, and we have written advice to that effect from employment lawyers. Real ones, who deal with this stuff for a living.

If you have a differing legal opinion (i.e. not just an assertion) which is based on fact (you know, quoting actual written law) then I’d be very interested to see it.

That may well be the case but the fact is the law is open to interpretation and the ultimate judge of whether something is legal or not (and therefore whether you are due conpensation or not) is the chair of the Employment Tribunal. Signing a compromise agreement means an employment tribunal will never have the chance to consider the rights and wrongs of your case.
So I am a bit cynical when an employer offers better redundancy terms to those that sign compromise agreements than to those that don’t. It isn’t illegal but why pay (probably thousands of pounds more) than you had to? It makes no sense unless as the employer you calculate that it will potentially save you money.

Maybe to avoid vexatious claims that cost management time to deal with that is never compensated for and legal costs which are often not recovered in full even when costs are awarded.

But of course this can’t be correct as the employer can’t have a benign and perfectly sensible commercial reason because they are a capitalist pig who are always out to get the poor repressed working classes.

TJ, can I trouble for that legal opinion please?

As you state that you advise people on this on what seems like a frequent basis, and you claim to know the law, I need to see this. I could be illegally making people redundant, despite Linklaters’ best efforts and legal advice.

Oh, and just as an aside, an unfair dismissal claim can be made even if the employer has followed the letter of the law punctiliously. Anyone can bang in a claim, no matter how preposterous. You did know that, right?

I’ll be waiting for you to back up your repeated claim that my company has acted illegally. Just not with bated breath.

nickf

I suspect there is a gulf of misunderstanding and a lack of comprehension between us and we are debating at cross purposes.

From my experience what you appear to state is your procedure is a clear unfair dismissal to those who refuse to sign. You appear to be relying on the threat to make folk sign. has one of these cases gone to tribunal?

Nope, no misunderstanding. Several times on this thread you unequivocally stated that what I outlined as a company procedure was illegal (both civil and criminal) and that anyone in such circumstances could take my organisation to the cleaners.

I’ve asked you for a legal basis for such an assertion, and you’ve failed to deliver this. In short, you’re asserting something you think to be true (and indeed wish to be true), but you’ve no legal grounds.

Given the way you’ve hounded people on other threads to answer the specific point you’d levelled against them, I have no compunction about using the same tactic against you.

So if what my organisation is doing is illegal please point to the law(s) we’re breaking. Or shut up.

Nickf – fair comment about put up or shut up.

I have had a reread and one post I forgot to qualify with an ” appears to” “possible” or similar weasel words and that was wrong of me. To be unequivocal is wrong – satisfied with that?

If your procedures are as you state then I am confident that an unfair dismissal claim would stand. Unless your procedures have been tested at tribunal or in court then there is no definitive answer.

As for

I suspect there is a gulf of misunderstanding and a lack of comprehension between us and we are debating at cross purposes.

this is in two areas.

I suspect that what I understood from your post to be your companies attitudes and procedures may not be what you intended and that what you have understood from my posts are not what I have intended.

Maybe to avoid vexatious claims that cost management time to deal with that is never compensated for and legal costs which are often not recovered in full even when costs are awarded.

But of course this can’t be correct as the employer can’t have a benign and perfectly sensible commercial reason because they are a capitalist pig who are always out to get the poor repressed working classes.

Vexations claims are easy to defend provided management have acted reasonably and followed their own procedures and the law. They only become costly to defend (lawyers time, investigations , statements etc) when there have been errors in the process.

And I admire your irony in being able to include benign and commercial in the same sentence without adding a smiley face at the end!

The cost benefit equation is easy. How much will it cost for me to get rid of this/these employees if they sign a compromise agreement VS how much will it cost me if they don’t and take me to tribunal.

The cost benefit equation is easy. How much will it cost for me to get rid of this/these employees if they sign a compromise agreement VS how much will it cost me if they don’t and take me to tribunal.

Not so at all, companies tend to overestimate the costs of legal proceeding as do stock markets, I am pretty sure there is some research on this and it is one of the areas where contrarian investors focus as they believe companies become undervalued when they face legal disputes (tracking the BP share price could arguably illustrate this but the benefit generally works out over a longer term). And dare I say it, some managers may overvalue their time.

And I admire your irony in being able to include benign and commercial in the same sentence without adding a smiley face at the end!

Well I guess if you find all commercial activity morally reprehensible then you may find that ironic but I don’t and therefore don’t. Anyway, I don’t do emoticons or whatever they are called.

NickF – not a lawyer but I am an expert on talent management issues and I worked in the outplacement field for a while so I’ve had experience of dealing with compromise agreements and redundancy situations. Here’s my ‘opinion’.

It largely doesn’t matter whether your company is breaking the law or not. It only matters what can be proved in a tribunal. Linklaters are there to makes sure you don’t get sued, not to make sure you don’t break the law. It’s a subtle but very important difference that arises from the nuance of the law not being black or white but rather open to interpretation (as has already been pointed out here).

If you’re using compromise agreements within a redundnacy type situation then I honestly don’t get why. If it’s genuine redundancy then where is the need for the protection from a compromise agreement?

To me that says the people you’re making redundant are likely to feel pi**ed off enough to want to bring a claim. Which as an expert in TM, would suggest to me you’ve got some leadership/management issues.

You’re incurring significant fees from Linklaters advising you on each and every compromise agreement. What I am not sure I understand is the number of people being impacted by this. If you’ve got less than 30 people your laying off (I could be wrong about this number, it’s a while since I focused purely on redundancy) then there is no need for a lenghty and costly consultation. The process can be managed I think in 30 days. It’s hardly time consuming or expensive. So if you’re prepared to pay Linklaters to manage that via compromise and pay people more to sign, then again, it would suggest to me you’ve got some seriously vexed employees that you need to keep from suing you. Again, I have to ask, what have you been doing to these people to NEED to spend more than you have to, in order to buy their silence.

There is a world of difference between acting illegally, acting in a way that WILL get you sued and just acting immorally or unethically.

Some people would like to argue that ethics have nothing to do with it. The Alan Sugar school of management types like to take HARD LINE approcah. Well that’s just dandy, but good luck when it comes time to trying to hire the best people in the market in order to remain competitive.

Nick – I’m not suggesting that your company falls into this category, but there are certainly questions that your strategy to redundancy raises and if i were working for you as a consultant, I’d certainly want to know what had been going on to make this strategy cost beneficial to you.

Well I guess if you find all commercial activity morally reprehensible then you may find that ironic but I don’t and therefore don’t. Anyway, I don’t do emoticons or whatever they are called.

Not at all but business is business and if a redundancy exercise would cost £X by method “A” but 25% less by method “B” most businesses would choose method “B”. That’s the commecial reality and cost benefit equation I was talking about.

Not at all but business is business and if a redundancy exercise would cost £X by method “A” but 25% less by method “B” most businesses would choose method “B”.

That’s true but the really big problem with taking that approach is that a lot of companies invariably get the calculation of ‘B’ horribly wrong, mostly because they don’t appreciate the loss of good will, impact on their reputation and, most importantly, the impact on morale of those that sta behind.

There is also the situation where senior employees expect to agree to compromise agreements, and consequently get more than the ‘minimum’. And the Managers doing the firing also want to ensure if its them in the future that the precedent has been set.

No expert, but I have been the receiver of six payoffs/compromise agreements (so far).

Well after over two weeks negotiating I have put it in the hands of the solicitors now, company has been reasonable on a number of things but on the legal technicalities it now needs a professional to iron them out.

I feel its a bit like walking a tightrope to try and get the best deal for yourself whilst avoiding going down the legal/ court route. Whilst of course not getting paid!!!