In short, a compromise agreement is a type of contract. It is an agreement to compromise on an issue between an employer and employee and is controlled by statute. Statute is a formal written statement that allows or forbids an action. A compromise agreement usually involves an employer giving the employee a sum of money in return for the employee signing a contract to say that they will have no further claims against the company in question. The compromise agreement is also subject to a waiver in case the employee breaches the agreement. A compromise agreement doesn’t have to be between an employer and a current employee, it can also be between an employer and ex-employee and made upon the termination of employment. To make the compromise agreement binding, a solicitor must be present to explain the contract to both parties involved. Compromise agreements have started to be used in redundancy cases fairly recently and many people wonder why a compromise agreement is really necessary. In simple terms, it is a form of insurance for the employer as it stops the employee from suing or making any further claims against the employer after the agreement or after they have been made redundant. The most common reason that an employer would get an ex-employee to enter into a compromise agreement is to make sure the employee will not sure for unfair dismissal after leaving the company. In short, a compromise agreement is a bribe (a very big bribe at that) to buy a person’s silence. The only downside is that the employee can then never make a claim against the employer. This contract is binding forever and means that even if another incident occurs twenty years down the line, the employee still can not make a claim. A compromise agreement is a final decision. The payment amount is specific to each different compromise agreement and the employee can expect to receive the sum of money agreed on seven to fourteen days after they (and all the other parties involved) have signed all the relevant paper work relating to the compromise agreement.