Types of Compromise Agreement

Compromise agreement is a legally binding agreement that is signed between an employer and an employee that settles potential employment claims. It is usually entered into when an employer wishes to terminate an employee`s employment, or the employee wishes to leave the employment voluntarily.

Compromise agreements are also known as settlement agreements, and they can take many forms, depending on individual circumstances. Here are some of the common types of compromise agreements that you should be aware of:

1. Full and Final Settlement Agreement

This type of agreement is the most common form of compromise agreement. It is used when an employer requires an employee to waive all their rights relating to employment claims against the employer in exchange for a sum of money. It is also used when an employee voluntarily resigns from their employment, and the employer agrees to provide them with a settlement sum in exchange for waiving their employment rights.

2. Enhanced Payment Agreement

An enhanced payment agreement is used when the employer agrees to pay the employee more than their contractual entitlements. Usually, this is done as an incentive to persuade the employee to agree to the termination of their employment.

3. Pension Contribution Agreement

This type of agreement is used when an employer agrees to make a one-time contribution to the employee`s pension fund as part of the settlement agreement. It can be in the form of a cash payment, or the employer can agree to continue making contributions to the employee`s pension fund for a specified period.

4. Restrictive Covenant Agreement

A restrictive covenant agreement is used in situations where the employer wants to restrict the employee from working for a competitor or soliciting clients and customers after leaving the employment. The employer may agree to pay the employee a sum of money in exchange for them agreeing to the restrictive covenants.

5. Reference Agreement

References are important to employees when they are seeking new employment. A reference agreement is used when the employer agrees to provide a reference that is agreed upon by both parties. The reference agreement may also include a clause that prevents the employer from providing any negative references.

In conclusion, compromise agreements can take many forms, and the terms of each agreement will depend on individual circumstances. As a professional, it is essential to conduct thorough research and understand the terms of each agreement to ensure that your articles are accurate and informative.