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Compromise Agreement: A solution following disciplinary allegations

25 January 2010

We advised a client in relation to a compromise agreement with her employer, a public sector body. Our client was offered a termination agreement following the raising of potential disciplinary allegations against her. Given the breakdown in relationship our client was in theory willing to accept a settlement offer, provided the terms were acceptable.
We advised our client as to the terms of the agreement offered and suggested appropriate amendments which would place her in a better position financially and protect her position when seeking future employment. Specifically, we ensured the client received her notice payment tax free. As there was no payment in lieu of notice clause in her contract, this was a tax free compensatory payment, thereby saving her tax at 40%. We also ensured the client was compensated for those pension contributions her employer would have made during her notice period.
To safeguard her prospects of finding future employment, we negotiated an agreed detailed reference with her employer and obtained a contractual promise from the employer that they had not brought any claims against our client and were not aware of any facts which would entitle them to bring such claims. We also ensured the client was released from any post termination restrictions in her contract of employment.
Our client was therefore able to leave her employment with a clean disciplinary record, a strong reference and greater compensation than she had initially anticipated.