Example compromise agreement templates
Below are extracts from a simple example compromise agreement with our helpful plain English notes in red. You can request a full up-to-date Word document compromise agreement template for just £15 by emailing us on farah@compromiseagree.com. We are also happy to send you a number of other types of compromise agreement documents, including:-
- without prejudice letters
- grievances
- ET1′s
- discrimination questionnaires
If you want to find out for free roughly how much your compromise agreement situation could be worth, try our Compromise Calculator. If you’re interested in representation, find out more here or just get in touch to discuss on 0800 533 5134, info@compromiseagree.com or send us a message in the box to the bottom right.
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WITHOUT PREJUDICE
SUBJECT TO CONTRACT
COMPROMISE AGREEMENT
This Agreement is made between xxx (the Company ) and yyy (the Employee ).
Payment
(A) 10,000 by way of compensation for loss of employment by reason of Redundancy. For the avoidance of doubt, this sum shall be inclusive of any statutory redundancy entitlement;
(B) Payment of your salary up to and including the Termination Date in the usual way. You shall also continue to be provided with any benefits in the usual way up to and including the Termination Date. This shall be subject to income tax and national insurance deductions;
(C) 100 by way of consideration for the obligations at clause 9 below. This sum shall be subject to income tax and national insurance deductions;
(D) 2,000 by way of 9 days outstanding holiday pay. This sum shall be subject to income tax and national insurance deductions]];
Payment of Tax
2. It is the parties understanding that the compensation amount under clause 1(A) is made in accordance with section 401-416 of the Income Tax (Earnings and Pensions) Act 2003. Accordingly, the Company will pay the compensation amount under clause 1(A) (if it falls due) without deduction of income tax up to 30,000, and without any deduction of national insurance.
this clause confirms that the first 30,000 of the ex gratia payment is tax free
The Employee hereby agrees to be responsible for the payment of any tax in respect of the sums payable under clause 1 and all other payments made and benefits provided under this Agreement (other than for the avoidance of doubt, any tax withheld by the Company in paying the sums to the Employee) and the Employee hereby agrees to indemnify the Company and keep the Company indemnified on a continuing basis against any claim or demand which is made against the Company in respect of any liability of the Company to deduct an amount of tax or an amount in respect of tax from the payments made and benefits provided under this Agreement, including any interest or penalties imposed in connection therewith and including, but without prejudice to the generality of the foregoing, any claim or demand made in respect of United Kingdom income tax or PAYE.
This is the tax indemnity clause. If the government suddenly changes the law, announces that ex gratia payments are no longer tax free, and then seek to recover tax from the employer; then the employer can asks the employee to pay the tax back. Don t worry, this is a very standard clause and is unlikely to happen!
Return of Company Property
See full version for this clause. Its pretty common sense stuff.
Legal Fees
See full version for this clause. The employee is not involved in this process the solicitor invoices the employer directly for the legal fees.
Settlement
The employee will not be able to sue the employer in the future you are signing away your rights in exchange for the payment you receive. The only 2 standard execptions to this rule are any claims in respect of 1) pension rights; and 2) any personal injury which you are not aware of now but which you later develop in the future due to your employment. These 2 types of claims cannot be compromised by law.
(A) any unfair dismissal claim;
(B) any claim for a statutory redundancy payment;
(C) any claim in respect of deductions from wages;
(D) any claim for payment in lieu of accrued holiday;
(E) any equal pay claim;
(F) any claim of less favourable treatment, discrimination, harassment, detriment or victimisation in relation to racial grounds or sex, marital status, disability, sexual orientation, religion or belief, age or part-time or fixed-term status;
(G) any claim relating to maternity, parental, paternity, adoption or dependant leave or pregnancy including a claim in relation to pay during any such period of leave;
(H) any claim relating to a protected disclosure;
(I) any claim in respect of which a conciliation officer is authorised to act; and
(J) any claim not mentioned above under the Employment Rights Act 1996, Sex Discrimination Act 1975, Race Relations Act 1976 or the Disability Discrimination Act 1995 and any claim under the Trade Union and Labour Relations (Consolidation) Act 1992, the National Minimum Wage Act 1998, the Part-time Workers (Prevention of Less Favourable Treatment) Regulations 2000, the Working Time Regulations 1998, the Human Rights Act 1998, the Employment Relations Act 1999, The Transnational Information and Consultation of Employees Regulations 1999, the Fixed-term Employees (Prevention of Less Favourable Treatment) Regulations 2002, The Employment Equality (Religion or Belief) Regulations 2003, The Employment Equality (Sexual Orientation) Regulations 2003, Part VIII of the Information and Consultation of Employees Regulations 2004, the European Public Limited Liability Company Regulations 2004, the Transfer of Undertakings (Protection of Employment) Regulations 2006, the Schedule to the Occupational and Personal Pension Schemes (Consultation by Employers and Miscellaneous Amendment) Regulations 2006 and The Employment Equality (Age) Regulations 2006.
(A) she is not aware of any facts or circumstances which might give rise to any claim by her against the Company or any Third Party other than those claims that she or her adviser on her behalf has expressly raised in open correspondence with the Company or the Company s adviser acting on its behalf; and
(B) she has not and will not commence any legal or arbitration proceedings of any nature against the Company or any Third Party in any jurisdiction arising out of or in connection with her employment with the Company its termination or otherwise save for the purposes of enforcing the terms of this Agreement.
Continuing Obligations
(A) not to use, disclose or communicate to any person whatsoever (unless required by law, ordered by a Court of competent jurisdiction or required by any regulatory authority having jurisdiction over the Company or any Group Company):
(1) any trade secrets or confidential information (which may include commercially sensitive information) important to and relating to the business of the Company or any Group Company or any clients thereof or their affairs of which she may have become possessed during her employment with the Company;
(2) the circumstances surrounding the termination of her employment; and
(3) the terms of this Agreement
this undertaking to apply until such time as such information comes into the public domain other than by reason of any breach of this undertaking; and
(B) not to make any derogatory comment about the Company or any Third Party in public or to any other party, including any comment about or in relation to its business or any of its officers or employees.
Warranties
(A) she has not at any time committed a repudiatory breach of his contract of employment which would entitle the Company to terminate her employment without notice; and
(B) she has not received any offer or does not have any expectation of any offer of employment or of a contract for services or of any consultancy from any person, firm or company.; and
(C) she is not entering into this Agreement in reliance on any undertaking, representation, warranty or arrangement of any nature not expressly set out in this Agreement; and
(D) she has not disclosed or communicated to any person whatsoever the circumstances surrounding the termination of her employment and the fact or terms of this Agreement.
This means that firstly the employee has to confirm that he hasn t done anything which would ve entitled the employer to fire him. Secondly the employee hasn t got another job yet or even received an offer that would mean that any compensation would be zero because there is no financial loss. Then there is an entire agreement clause, which means that anything promised in a meeting or an email is not valid, unless its expressly part of the compromise agreement document.
Legal Advice
See full version for this clause.
Compromise Agreement
See full version for this clause. This type of clause is legal jargon whereby you agree that this document is, by definition, a compromise agreement. Again, a very standard clause, but essential according to the law.
Third Parties
See full version for this clause
English law
See full version for this clause
Jurisdiction
See full version for this clause
Definitions
Affiliate means, in respect of any undertaking, an undertaking which is its subsidiary undertaking or parent undertaking, or an undertaking which is a subsidiary undertaking of that parent undertaking;
Group means the Company and any Affiliate of the Company and Group Company shall be construed accordingly;
Third Party means any Group Company or any employee, agent or officer of any Group Company or the trustees of any retirement benefits scheme or employee benefit trust of any Group Company.
Other words and phrases, the definition of which is contained or referred to in s258 or Part XXVI of the Companies Act 1985 or in any provision of the Companies Act 2006 which is in force at the date of this Agreement (including without limitation s1162), shall be construed as having the meanings thereby attributed to them.
This Agreement although marked Without Prejudice will upon signature by both of the parties and the adviser, be treated as an open document evidencing an agreement binding on the parties.
Signed ………………………………………..
on behalf of the Company
Dated ………………………………………..
Signed ………………………………………..
The Employee
Dated ………………………………………..
Signed ………………………………………..
[Compromise Agreements solicitor]
Dated ………………………………………..
____________________________________________________________________________________________
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If you have any queries concerning this compromise agreement template or if you’d like to find out about our bespoke representation and advice service, get in touch by email on info@compromiseagree.com, call us on freephone 0800 533 5134 or 020 7717 5259, or send us a message in the box to the right.
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