CLYDE & CO UPDATER: EMPLOYMENT LAW BRIEFING - AUGUST 2019

This month's employment law briefing focuses on the process of terminating an employment contract by way of an agreement between an employer and an employee. This form of termination is commonly known as a "compromise agreement" or "separation agreement".

A compromise agreement entered into between an employer and an employee sets out the terms for termination of an employment contract.

In practice, an employer may consider entering into a compromise agreement either:

1. where there is insufficient proof to justify the termination of an employment contract on the grounds of conduct, capacity or incompatibility; and/or
2. an employer is unwilling to go through the usual procedure for terminating an employment contract (which can be lengthy, costly and difficult)

This briefing note covers the following:

1. the legal basis of a compromise agreement;
2. the risks and limitations of compromise agreements; and
3. the actions that can be taken by an employer to mitigate the risks associated with compromise agreements.

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