Compromise Agreement Case Study: Three-fold Compensation Increase

Summary

How Fiona Martin secured a three-fold increase in compensation and a reference as part of an employee’s Compromise Agreement.

The situation

John (not his real name) was a financial manager at a large firm. There were a number of issues in the business and a new financial director had joined. Soon afterwards, John found out a consultant to the business was blaming him for problems of the consultant’s making.

John was called to a meeting where he was told there were a number of serious allegations about the performance of his duties. The outcome, he was informed, was likely to be dismissal for gross misconduct and negligence. As a way of terminating his contract of employment, before the disciplinary hearing John was offered a Compromise Agreement.

The Compromise Agreement gave John a basic reference and three months’ tax-free notice pay – a total of £7,750. In exchange, John had to waive his rights to bring any claim in an Employment Tribunal or Court and keep the circumstances of this termination confidential.

What martin searle solicitors did

John came to see Fiona Martin for advice on his Compromise Agreement. Employers are legally obliged to ensure employees get independent legal advice before entering into a Compromise Agreement and usually pay a contribution towards the cost.

At their first meeting, Fiona advised John his employer’s threats to dismiss him if he did not agree to the Compromise Agreement could be revealed to a Tribunal to prove unfair dismissal. This was the case despite the offer being ‘without prejudice’ and the threat being made off the record.

In addition, having looked at the allegations and John’s explanations, Fiona advised it was unlikely the employer could rely on the unfair and unfounded charges against him.

Fiona helped John draft a formal grievance and prepare a full defence to the allegations. She then sent a letter to John’s employer setting out his legal position and attaching his grievance.

The result

The employer’s solicitor initially denied John had been threatened with dismissal. However, when it became clear John would be defended at the disciplinary hearing, a compensatory payment of £23,250 was agreed – significantly greater than the original £7,750 offered. The Compromise Agreement also included a reference to help John find a new job.

Find out more about how we can help with Compromise Agreements as well as our compromise agreement employment law service for employers and trade unions with multiple sign-offs.