Partner Article

Law firm advises SMEs to compromise

SMEs needing to make redundancies due to difficult trading conditions should consider compromise agreements to protect them from future claims, that’s according to a North East law firm.

Swinburne & Jackson LLP is seeing an increase in the need for compromise agreements due to the higher number of severances being made following general downturns in activity caused by the recession.

In their simplest format, compromise agreements ensure that the individual leaving the company receives a severance package and in return the employee agrees not to pursue any claim against the employer at an employment tribunal.

The company benefits because the agreement confirms the individual’s acceptance of the package as full and final settlement which means they cannot later dispute the way the process was carried out and the ultimate outcome.

Andrew Coulson, managing director of estate agents Northumbria and Cumbria Estates, believes compromise agreements to be a useful business tool.

He said: “Compromise agreements are an ideal way to have an up front and honest discussion between all parties so that everyone knows exactly where they are with things.

“With the current economic climate, it is more important than ever for businesses to know there are no nasty surprises around the corner.”

Naila Sarwar, an employment lawyer at Swinburne & Jackson, added: “It is often the case that employees will accept a package but then dispute the way the process was carried out after the event.

“Compromise agreements take this into consideration and protect both parties as the individual receives what is their due and the business can rest easy knowing that a claim won’t be coming their way.”

Swinburne & Jackson has offices in Gateshead, Chester-le-Street, Hexham, Washington and Ryton.

This was posted in Bdaily's Members' News section by Ruth Mitchell .