this video won't take a look at something that I come across very very
regularly that is a compromise agreement or settlement agreement where an
employee is going to leave the employment so there may have been a
dispute of some description there may have been a grievance - may have been
perhaps even a disciplinary proceeding the relationship as well may have just
broken down between the employer and employee and essentially they recognize
both parties the employer and employee that the relationship is broken down and
they're going to go their separate ways in these circumstances you're gonna have
a compromise agreement or a settlement agreement agreement this is a negotiated
exits which the employee is expected to sign now in return for signing this the
employee is going to be given some sort of an exit package a settlement payment
in addition to perhaps statutory redundancy and notice and any holiday
period it might be outstanding the employee we also perhaps be given a
settlement payment in return for this the employee will be waiving his or her
rights to bring out a claim against the company arising from the employment into
the future so if we just take a look at a compromise the typical compromise
agreement this is a kind of a standard compromise agreement that you will come
across or may be faced with if you're an employee or me if you're an employer so
the first thing to know about the compromise agreement is that it's marked
without prejudice at subject conflict in other words all aspects of the
negotiation or aspects of the agreement are without prejudice and subject to
contract until there's a binding contract in place that is it's signed by
both parties that's staged and you could buy an inn
contract in place until then there's no binding contract in place negotiations
are on without prejudice basis and that means that of a concluded agreement has
not arrived that then the parties they cannot lay for a Nerdist news or
to go to court or if to go to the workplace relations commission they
cannot refer to what was discussed in the attempt to come to an agreement or a
settlement that's why it's market or creches so all bets are off until both
parties are happy and both parties sign the agreement
then you know binding agreement in place so your typical agreement is like the
one I'm showing on the screen there firstly obviously is going to be David
it's going to set out who the company or employer is and who the employee is and
then it's just going to go through some basic stuff like the employees an
employee of the company and holds the position of and then it's been agreed
between the parties that the employment will terminate on some certain days in
accordance with the terms of this agreement then it may go on to give some
definitions for example if it was a very big company there may be associated
companies or group companies or something of that nature question this
is really tied to your stuff it's not really too applicable to most situations
where an employer is going to be terminating the employment of an
employee on the green basis so as you can see they're number two you're going
to have a termination date so the employment will terminate on the
termination date for the number three the most important thing with one of the
worst important things certainly from the employees point of view is the
payment so the how much is the employee gonna get by way of settlement payment
or next class you'll know some payments and one very very important thing to
recognize here is that there are very very important tax implications to do
with settlement agreements so if your
employee and you're getting a good package or indeed even you know whatever
package you might be getting you should be getting tax advice from a tax
consultant because the whole area of taxation surrounding settlement
agreements can be quite complex the only thing you can be absolutely sure of is
that statutory donna C is exempt from tax otherwise
it's possible that the payment refer to it you know agreement is going to be a
gross payment and will be subject to the normal deductions for example tax psi
universal social charge and so on so make sure to get tax advice about that
don't take your advice from a solicitor and I wouldn't even recommend you take
advice from an accountant that would recommend that you get advice from a tax
consultant so that's the payment situation that's absolutely key the next
thing then is most agreements will provide that the employer will pay some
money towards the employee getting legal advice this isn't just a generous
altruistic thing on behalf of the employer
this gives the employer some cover because the employee will never be able
to turn around and say I sign this agreement but I want to bring a claim
now and I didn't know what I was signing the employer will have proof that the
employee has got legal advice and the solicitor and will be requested to send
an invoice to the employer to get paid so the employer will have proof and
that'll be the employer sort of guarantee that whatever else might
happen afterwards the employee cannot turn around and say I didn't know what I
was signing and I haven't got advice so legal advice and legal cost then it'll
just set out there that generally the solicitor will send his or her invoice
to the employer to be paid directly the tax situation then you'll see there in
this particular one the employer is deducting all relevant taxes it's etc
sometimes these agreements will ask the employee to indemnify the employer
against any taxation rising after at the agreement that is why it's crucial to
get tax advice particularly if there's a significant amount of money involved and
that's why you'll always see a statement like this one here and the employer will
make the payments as tax efficiently as possible
compatible with law that's all very well but you really need to know if you do
not deal and you're an employee you need to know what you're getting net and you
should probably or it should certainly clarify that this is very very important
as well this is the waiver so it's in full and final settlement in other words
you was employee you're getting the money and you're signing away your
rights it's in full and final settlement of all and any grievances or claims that
might arise from the employment situation so you're providing a full
employee or waiver to the employer in respect of future claims you're not
going to bring on it you're absolutely hamstrung and that's what the agreement
is about so get the money and you don't bring any
claims that's really the deal you know and the employee gets an extra
co-payment or some sort of a termination payment and the employer against peace
of mind and satisfaction that North claims are going to arise in the future
there may be a situation there where if the employee is getting expenses that
are going to have to just settle up the expenses before the goal to go and also
undertake in the agreement to return company property
perhaps a laptop perhaps an iPad perhaps a company car that all has to be done
then there's got to be an obligation of secrecy on both parties so the thing
will be confidential the agreement and the terms and conditions of the
agreement will be absolutely confidential there also be standards for
patrols there in relation to intellectual property and there'll also
be like laws perhaps in relation to communications into the future that the
employee is not holding himself or herself out as an employee of the
company any further there may also be and it's something that you should
negotiate if you're an employee an agreed reference so you should try to
ensure that as part of any exit' deal or exit package in yet you're gonna get
obviously the payment the termination payments and you're going to get an
agreed reference and you should have some input into the reference and
obviously get as well or a reference as you can a name that statement may be
appropriate in some big companies in other words is an agreed statement
issued to the rest of the workforce as to you know you've gone off to join a
buddhist monastery or you've gone to India to travel and find yourself or
something of that nature but no joking aside it'll be that you've
obviously decided to pursue other interests elsewhere or something of that
nature that may be an exit statement in a smaller fit quite frankly to obtain
exit statement but you should negotiate from the great reference so you need to
ensure you get the money and you need you should ensure you get reference
ongoing obligations then both parties will acknowledge that they are bound by
the terms of the agreement and then the employee will be giving non-rotating in
relation to future assistance to the employer
again confidentiality would be key and generally the few standard boilerplate
things here that is the entire agreement between the parties and perhaps the
jurisdiction the governing law and jurisdiction of the agreement one other
thing would be that the parties will agree and non-disparagement cause that
is both parties will agree not to bad-mouth the other party party so
that's a non disbursement frogs I don't see it here but that would be standard
enough again it's without prejudice so everything nothing is agreed until
everything is agreed the agreement is marked without prejudice until it's
signed and by both parties and at that point becomes binding it becomes open
and that's it there's a deal done contract done bought party sign so
there'll be two copies of the agreement basically and that the employee will
sign first and then both goes back to the company and the company will sign
both and hold on to one each party they're not the company of the
contributor agreement here's the schedule where you might have an agreed
reference sure so the company will set out in the agreement the reference that
they've gotta give when they're asked about you your performance in the future
and they may also ask for a further wave or even though the agreement itself is
really waiver by you the employee not to bring any claims against the employer
they may even ask for a specific letter of waiver to be signed on the
termination date in addition that's basically if it's a package
settlement agreement and negotiated eggs of parachute car what you like it's a
compromise agreement it's negotiated between the parties you do the best
thing that you can do you negotiate the best deal you can if your employee make
sure that you get as much money as you can make sure you get tax advice and
make sure you get a reference and you do need to be absolutely aware and you are
to understand that you are giving up your rights to bring any claims
afterwards so whether it's personal injury or whether it's payment of wages
or unfair dismissal or anything else bullying harassment cetera you are
waiving your rights that's the whole croppers over I hope you find this video
useful if you do you might give it a thumbs up down below thank you