Compromise Agreements: Employee´s Breach Causes Windfall For Employer

The Employment Appeal Tribunal (EAT) has recently reiterated the potential out ome of an employee's breach of warranty under a compromise agreement.

Compromise agreements, if properly drafted, constitute a valid waiver of statutory and contractual claims that an individual may have against their employer or former employer, in return for almost invariably a cash payment.

The amount of the settlement is going to be influenced by the strength of the individual's claims. Therefore, in reaching any compromise agreement, employees are frequently required to warrant that they have not committed any repudiatory breaches of their contract of employment (which would have entitled the employer to terminate their employment without notice or payment in lieu of notice).