Martin Malone outlines the key elements which need to be considered when agreeing severance terms.

In the modern work place, the most common way of bringing employment to an end is via a compromise agreement. A properly constructed and negotiated agreement allows both employer and employee to part on terms that are amenable to both parties. Although common, it takes a specialist and years of experience to advise on and draft terms that ensure that a departing employee can achieve not only enough remuneration to ease the transition from one position to another, but security for his or her contractual benefits, pensions, share options and peace of mind that restrictive covenants or taxation will not impact adversely on his or her future ambitions.

If your employment relationship is coming to an end, for whatever reason, it is vital that you seek legal advice at the earliest opportunity. By instructing an employment lawyer at Canter Levin & Berg, you can ensure that you get the best deal possible from your compromise agreement. We can advise you on the effect of the terms on your benefits, bonuses, share options, restrictive covenants, taxation and remuneration and advise and represent you in negotiations with your employer. We will advise you on what you are gaining and what you are compromising on.

A compromise agreement is only valid if you have taken advice from a solicitor or barrister as to the terms and effect of the agreement and its effect on your ability to pursue rights before an Employment Tribunal. The compromise agreement must be in writing, identify the advisor and specify that the advisor has an professional indemnity insurance contract in place to protect the advice given.

The most common areas in which employees take advice before signing a compromise agreement are:

• Bonus
• Car
• Mobile phone
• Medical insurance
• Pension
• Life assurance
• Share options
• Shares
• Accrued holiday pay
• Press releases
• Tax