When the relationship between employer and employee is strained or breaks down the employer may be tempted to terminate that employment or the employee may consider resignation. Either option carries risk as the employee may seek to pursue a claim with the Employment Tribunal for reinstatement or damages if he / she has been unfairly or wrongfully dismissed, including constructive dismissal if the employee resigns.
As such, for a period of 3 months (less one day) following the effective date of termination the employer has to wait nervously to determine whether employee has issued proceedings with the Tribunal. If so, then a claim has commenced and will need to be tackled.
To combat this issue and to provide certainty and agreement as to the terms of a departure the parties can enter into a compromise agreement or a contract between them that clearly identifies the terms. Ordinarily that agreement provides for a sum of monies to be paid to the employee, whether as salary or holiday owed or as a payment upon departure, in exchange for the employee confirming he will not pursue a claim to the Employment Tribunal.
However, it is not always appropriate to accept the terms of a compromise agreement if the employee could achieve a higher award or improved exit terms by pursuing mediation, litigation or negotiation.
To avoid entering into an agreement not suitable for the employee we at Edward Hands & Lewis suggest you call our employment law team on 0116 2665394 to discuss your position with a free no obligation consultation.