Martin Malone outlines the key elements which need to be considered when agreeing severance terms.

In the modern work place, the most common way of bringing employment to an end is via a compromise agreement. A properly constructed and negotiated agreement allows both employer and employee to part on terms that are amenable to both parties. Although common, it is vitally important for employers to ensure that compromise agreements are correctly prepared in order to protect their interests. It is also important to remember that although compromise agreements are intended to prevent employees from bringing employment tribunal claims, failure to follow the correct procedure can result in an employer losing that protection.

It takes a specialist and years of experience to advise on and draft terms that ensure that a compromise agreement is prepared correctly from an employer's perspective. By instructing an employment lawyer at Canter Levin & Berg, you can ensure that you get a watertight compromise agreement. We can advise you on the effect of the terms on benefits, bonuses, share options, restrictive covenants, taxation and remuneration and advise and represent you in negotiations with your employee. We will advise you on what you are gaining and what you are compromising on.

A compromise agreement is only valid if the employee has taken advice from a solicitor or barrister as to the terms and effect of the agreement and its effect on his or her ability to pursue rights before an Employment Tribunal. The compromise agreement must be in writing, identify the advisor and specify that the advisor has an professional indemnity insurance contract in place to protect the advice given. This means that it is inevitable that the draft agreement will be scrutinised by a professional so you cannot afford to take any chances.

The most common areas in which employees take advice before signing a compromise agreement are:

• Bonus
• Car
• Mobile phone
• Medical insurance
• Pension
• Life assurance
• Share options
• Shares
• Accrued holiday pay
• Press releases
• Tax

If you are an employer and you are contemplating the termination of employment of any of your employees, contact us now for expert practical assistance. We offer fixed price services agreed in advance. Alternatively, if you subscribe to Canter Levin & Berg Employment Solutions, our compromise agreements advice and support are included with your subscription. Call us now on 08000 832 832 or complete the quick enquiry form on this page.

Read more about compromise agreements here.