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Compromise Agreement Legal Advice - 3 More Persuasive Arguments


( -- February 20, 2013) Milton Keynes, UK -- In the previous part 2 to this Compromise Agreement Legal Advice editorial series, we revealed three common factors and arguments that are frequently used to negotiate more favourable terms to a compromise agreement.

In this final editorial we take a look at 3 more highly persuasive factors that can assist employees to negotiate better compromise agreement terms.

Employee's Existing Contractual Benefits

Employees that have generous employment benefits tied into their contracts of employment, will want to receive fair compensation for the loss of these benefits on the termination of contract.

Employees will want to ensure that they are at least receiving fair monetary compensation for these additional fringe benefits up to the date of termination and covering the notice period.

And if the employment is being terminated under dubious circumstances, for example, the employer has tenuous grounds for dismissal, then an employee should certainly factor into the negotiations, not just compensation for loss of future earnings while they look for a replacement job, but also the loss of contractual fringe benefits, as these can quickly add up, not least of which are contractual bonus payments.

Also consider whether the employer is prepared to offer outplacement support which are specialist support services designed to help you move from your existing role into finding a new job role. This can certainly be helpful in speeding up the processing in finding a new position as these support services tend to be tailored around an individual employee's specific needs.

The Existence of a Potential Employment Claim

For a dismissal to be lawful the dismiss must be for one of 6" target="_blank" title="fair reasons for dismissal">"fair reasons" as specified in section 98 of the Employment Rights Act 1996.

Where an employer seeks to terminate an employment contract in breach of UK employment laws and regulations, or where a compromise agreement is being used by an employer to settle an ongoing dispute with an employee, an employee will often find that there is more room for negotiation to obtain better terms of severance.

Many employees will often allow for some flexibility in their negotiations on the severance package offered if only to path the way for a smoother exist of that employee.

Tax Liability

Severance packages up to £30,000 are potentially exempt from income tax.

However, only payments that relate to "compensation for loss of employment" are included within this tax exemption.

Any payments made by an employer to comply with an employee's contractual entitlements such as notice pay, bonus pay, monies for accrued holiday, are not "compensatory" in nature and are therefore treated by HM Revenue & Customs as income subject to tax.

If the circumstances allow it, an employee may seek to bundle more of the severance pay as "compensation" in order to use up more of the tax exemption. In a previous editorial we looked in detail at" title="compromise agreement tax implications">compromise agreement tax liability, which would be a good place to start if you need more information on this.

Use as many of the 6 factors that are relevant and that we outlined in this compromise agreement legal advice editorial series to negotiate with your employer an improvement in the financial terms of severance.

If you're looking 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 the writer's website at or you can contact the writer, who is a specialist" title="compromise agreement solicitor">employment compromise agreement solicitor, by using the contact information below.


Organisation: Cardona & Co Solicitors


39 King Edward
New Bradwell
Milton keynes
MK13 0BG

Tel:01908 225672

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