What terms does a Compromise Agreement have to contain?

The compromise agreement will state the full breakdown of the
payments you are receiving and the extent to which the sums will be
paid free of tax. Usually, up to £30,000 compensation can be paid
without deduction, but you will have to give tax indemnity to your
employer within the agreement. This is entirely usual.

The compromise agreement will also provide for confidentiality both
in terms of your employers trade secrets and business affairs and
also of the terms of the agreement. You will be paid a small
additional sum for agreeing to this-usually a few hundred pounds.
You will also usually be required not to make any derogatory
comments against your employer. Some employees prefer such
agreements to be mutual, and employers are often receptive to such
request.

The compromise agreement may confirm the existing post-termination
restrictive covenants that you are already bound by under your
contract of employment. In some cases, the covenants are new, having
appeared in the compromise agreement for the first time. In either
case, you need to take specific advice on this as your ability to
work for a competitor and/or service old clients and customers could
be hampered after you leave.

There will be a long list of statutes in the compromise agreement
(such as the Race Discrimination Act, Sex Discrimination Act,
Employment Rights Act) and many more, under which you will agree not
to bring a claim. You should not be concerned by this. The
compromise agreement is intended to be in full and final settlement
of all claims but the employer needs to list these to be able to
enforce the agreement.