If you reach an agreement with an employee about the termination of their employment, it is important to have the details in writing and for the agreement to have legal effect. We recommend that you contact one of our solicitors for advice. Any severance package should be drawn up into a Compromise Agreement.
A Compromise Agreement is a legally recognised and safe way of terminating someone’s employment and finalising a settlement. It minimises the danger of future complications or problems arising after the end of the employment.
If you do not comply with the law in terminating someone’s employment, they could complain to an Employment Tribunal that the termination was unfair. This could result in you having to pay them compensation.
The only way you can be sure that an ex-employee will not complain to an Employment Tribunal after the termination of their employment is for them to sign away their right to do so.
This is done in a Compromise Agreement and has the effect of turning the agreement into a “full and final” settlement of any claims that the employee may have had in respect of their employment.