Compromise Agreement Legal Advice - 3 Persuasive Factors
(Newswire.net -- February 20, 2013) Milton Keynes, UK -- Employment compromise agreements are in the main legal documents for the benefit of the employer since they serve as a safeguard that the employee will not sue the employer at the end of the contract.
That being the case, it is in the employees interest to ensure that they negotiate a decent settlement since they will be giving up certain employment rights by entering into an employment compromise agreement.
With that in mind here are some of cogent factors that may be used when coming up with persuasive arguments to negotiate a better severance deal.
Is There a Dismissal Without Notice?
An employer may dismiss an employee without notice if there are strong grounds to do so, such as in circumstances of gross misconduct.
An employer may also bring a contract to an end where the contract of employment expressly permits a termination of the contract without notice, allowing the employer instead to pay a sum in lieu of the notice period.
If the contract of employment is silent on the point, an employer that seeks to dismiss without notice will in effect be in breach of contract. However, since the loss to the employee is the salary that they would have earned during the notice period, the employer may simply remedy this breach by paying the employer for the notice period.
The end result is the same for the employer, however from a tax point of view the payment in the latter case is defined as a "compensation payment" from a HM Revenue & Customs perspective on compromise agreements and is subject to the £30,000 tax exemption.
Are There Restrictive Covenants?
Many employment compromise agreements contain post termination restrictions such as a non-competition clause to prevent an employee from directly or indirectly setting up business in competition with the employer. Or to prevent an employee from working directly with a competitor, whether in an employed or self-employed capacity.
If the restrictive covenant simply restates what is already contained in the employee's contract of employment, then there is little leverage that can be used here for negotiating better terms.
If however, the employer is seeking to either extend the restriction in some way beyond what is currently in the employment contract or to include a restriction that is not covered by the contract of employment, an employee will have a good case to argue for an increase to the severance package on offer.
For more senior employees, such restrictions may present more of a restraint on that employee's ability to find alternative employment and with that being the case have more room to argue for a higher level of compensation.
Agreeing a Written Employment Reference
There is no legal requirement for an employer to give a reference and if one is provided it need only be factual in nature.
In circumstances where the relationship between the employer and employee are not at their best or where the employee has some concern, either that the employer won't give a good reference, or refuse it give any reference at all, it would be sensible for the employee to request that the wording of a written reference be agreed as part of the terms of the compromise agreement.
Often overlooked in compromise agreements, written references can be the difference between getting selected for that next employment opportunity or not. So if an employees has any concerns about this, then its best to err on the side of caution and include it within the terms of the compromise agreement.
Dismissal without notice, adding restrictive covenants beyond current employment contract terms and obtaining an agreeable reference are three of the most common negotiating terms in compromise agreements.
If you are interested in finding out some more persuasive arguments to negotiating better terms of compromise agreement, you can read our editorial entitled Compromise Agreement Legal Advice - 3 More Persuasive Arguments.
For more on compromise agreement legal advice, including answers to some of the most commonly asked questions on employment compromise agreements, you can go over to www.cardonaandco.co.uk/compromiseagreement or contact the writer using the contact details below.
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