Fiona Martin answers a question on signing off multiple Compromise Agreements
Q: I am about to make 20 people redundant and I am offering enhanced terms. I want to use Compromise Agreements. Could I ask one law firm to represent all my employees so that all the Compromise Agreements are signed off quickly and efficiently?
FM: Compromise Agreements are legally binding agreements between an employer and an employee. It is usual for a Compromise Agreement to be entered into shortly before or after the termination of an employee’s contract. This allows a clean break where the employee agrees to waive their right to make a claim in return for an agreed sum of compensation.
It is a legal requirement that an employee receives independent legal advice before entering into a Compromise Agreement. The employer usually pays a fixed sum contribution towards the cost of this legal advice.
Where a number of redundancies are being made, it is often more efficient for one firm to advise all employees. It is perfectly legitimate for you, the employer, to choose a firm that offers such a bulk Compromise Agreement sign-off service. However, every staff member would still have the right to choose their own employment law solicitor instead. If you do decide to nominate one firm to perform this role, make sure you advise employees of their right to instruct an alternative employment solicitor should they so wish.
Of course, there are many benefits of using one firm to sign off multiple Compromise Agreements. As well as an efficient service, you may be able to have all the Agreements signed on your own premises over a day or two. You may also be able to negotiate a lower contribution for each Compromise Agreement.
If you do instruct one law firm to act for your employees, this firm will negotiate with your own legal team or solicitors if they encounter any problems with the Compromise Agreements. To make the process as straightforward as possible, it is important that specialist employment law solicitors are involved in both the drafting of the Compromise Agreements and advising on your proposed enhanced settlement terms.
This article was published in Business Edge, March 2010
The information in this article is provided as general guidance only. The law in this area is regularly subject to change, challenge and update. You should always check the up-to-date position and if appropriate seek further specialist advice.
