“An employment relationship, rather like a marriage, can breakdown and when it does it can be difficult for the employer and employee to ‘patch things up’ and move on.”

Says Nicholas Bowers, Partner and Employment law specialist at Clarke & Son LLP.

“If that is the case then it is often better for both parties to reach an amicable settlement rather than go through the stress and expense of Employment Tribunal proceedings.”

The Government recognised this situation some years ago and introduced the concept of what are known as Compromise Agreements, which are now regulated by fairly extensive legislation designed to protect the employee’s interests.

In basic terms a Compromise Agreement provides for the termination of the employment contract on agreed terms. Often the employee will receive a generous compensation payment for loss of his or her job. The amount of that compensation will depend on a number of factors, one of which is the likelihood of the employee bringing successful proceedings in the Employment Tribunal for compensation for unfair dismissal. In return the Compromise Agreement will provide that the compensation payment is in full and final settlement of all the employee’s claims against the employer, including not only unfair dismissal but all other potential claims available to the employee.

Given the extensive potential claims being ‘given away’ by the employee an important part of the Compromise Agreement procedure is that the employee has to be given advice on the Agreement by an independent legal advisor, not connected in any way to the employer. Invariably the employer will make a substantial contribution to the employee’s legal costs incurred in taking independent advice.

So, the first time that many employees encounter a Compromise Agreement is when they are faced with redundancy or dismissal and are often in a distressed state of mind. This can be made worse by having to go and see a solicitor or legal advisor for the first time to go through the agreement with them and explain its legal effect if they agree to sign.

However, most solicitors that they see will be experienced in employment law and will appreciate the clients concerns and anxieties and will be familiar with the potential problems. They will also be able to advise clearly whether the Compromise Agreement offered is in the client’s best interests or whether a better deal can be negotiated.