Compromise agreements are a tool for employers and employees to part ways on agreed terms. An employer can suggest them during the termination or redundancy process, for example, or an employee is also within their right to suggest a compromise agreement – it’s just typically less common.
Once signed, it means both parties have agreed to the terms of the agreement and the nature in which their business relationship will end. It also means employees have agreed not to bring a claim against their employer following their departure from the company, either in court or through an Employment Tribunal (some exceptions can apply, though, which we’ll briefly cover). That being said, there should be a fair level of compensation on the table given employees are asked to forfeit their right to pursue a claim.