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Compromise Agreements

A well drafted compromise agreement that is executed correctly and fairly will minimise the possibility of a successful claim being brought in respect of the former period of employment. An example of a compromise situation that was not dealt with properly was when an employee was awarded €10,000 by the EAT for unfair selection for redundancy (Ref UD 1921/2011) despite having signed a waiver accepted €25,000 as a final settlement of all claims arising out of his employment.  The EAT  decided to hear the case as the employee had not been advised to seek legal advice before signing the waiver.

On the contrary in another case that was brought before the Equality Tribunal (Ref E2015 - 002), the Equality Officer determined that they did not have the jurisdiction to hear the case as the employee had signed an informed waiver after engaging in a thorough process that involved receiving legal advice from his solicitor and junior and senior counsel.

A compromise agreement will not be upheld if the employee did not have informed consent and the opportunity to avail of appropriate independent legal advice before signing a waiver and discharge of their entitlements and potential claims. In this regard an employee should be informed in detail of the various entitlements and pieces of legislation that apply as opposed to a generic discharge of all potential claims that may arise from the employment relationship. They should also be clearly given the time and opportunity to seek legal advice. This information should always be put in writing and included within any agreement that an employee is being asked to sign. 

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