If you’re entering into negotiations relating to a compromise agreement (soon to renamed a settlement agreement) then your employer has an obligation to inform you that you should obtain independent legal advice from a relevant legal adviser. An issue for employees is therefore: who is a relevant legal adviser and where can you get in touch with one?
- What is a compromise agreement?
- Why do I need independent legal advice on my compromise agreement?
- Who is a relevant legal adviser?
- How do I find a relevant legal adviser?
What is a compromise agreement?
A compromise agreement is a “creature of statute” – a specific type of contract which allows an employer and an employee to agree that the employee will have no further claim against the employer as a result of any breach of a statutory obligation by the employer. In return, the employee receives some form of compensation – whether financial (i.e. a sum of money) or non-financial (i.e. provision of a good reference, an agreement as to confidentiality etc.). The signing of a compromise agreement doesn’t necessarily mean that the employee’s contract of employment will terminate (although it usually does).
Why do I need independent legal advice on my compromise agreement?
Under the Employment Rights Act 1996 the conditions for a valid compromise agreement are as follows (among others):
- It must be in writing
- It must relate to “particular proceedings” (i.e. list the proceedings being settled – this is normally all of them)
- The employee must have received independent legal advice from an independent legal adviser
- The independent legal adviser must have in force a contract of insurance or indemnity which covers the employee in respect of loss arising in consequence of the advice they are given
- The compromise agreement must identify the the independent legal adviser
- The compromise agreement must state that the conditions regulating compromise agreements under the Employment Rights Act 1996 are satisfied
Who is a relevant legal adviser?
A relevant independent legal adviser includes the following (among others):
- Qualified lawyers (which in England and Wales means barristers, solicitors, “authorised advocates” and “authorised litigators”)
- Officers, officials, employees or members of an independent Trade Union
- Advice centre workers who have been certified as competent to give advice
An important stipulation is that the person giving the advice must be independent of the employer. If they are not suitably independent then the compromise agreement may not be valid.
How do I find a relevant legal adviser?
There are a number of ways that an employee can find a relevant legal adviser:
- Search on the internet – for example, search “compromise agreement solicitor” in Google
- Ask a friend or someone who has received good advice previously
- Go into your local advice centre or solicitors firm and ask
Redmans Solicitors are compromise agreement solicitors based in Richmond and the City of London.