Understanding A Compromise Agreement

A compromise agreement might in a general sense be used to refer to the documentation which enforces a given compromise, but in a more specific sense, it refers to a type of contract prevalent in the United Kingdom. Compromise agreements are contracts between employers and employees which are designed to ensure that the employee receives some amount of restitution from the employer in exchange for the employee renouncing any claim to further funds and any claim to an additional obligation from the employer.

Most often compromise agreements are instituted in situations when the employer has breached some element of United Kingdom law or statute, such that the employee does have a significant claim upon the employer of funds or of some other obligation.

The compromise agreement would discharge this debt in a fashion potentially less costly to the employer and most likely much more quickly than a full court proceeding.

Compromise agreements may sometimes be undesirable for the involved parties, particularly for the employees who might have been harmed by the breach on the part of the employer, but they will often have benefits for both sides. An employer who goes into a compromise agreement will know that the issue will be wholly discharged with the completion of the compromise agreement because the employee will have signed a waiver saying that he or she has no more claim upon the issue. The employee will also receive a clear monetary sum in exchange for this renunciation, which he or she might not otherwise be able to obtain through court proceedings against the employer.

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