Do I have to contribute to legal costs?
In short the answer is no - the law does not require an employer to contribute towards the legal costs of the employee in relation to a compromise agreement. However, London Compromise Agreements is here to give you practical advice. In practical terms, for a compromise agreement to be binding it must be signed off by an independent legal advisor who has a professional indemnity insurance to give such advice. In other words, your employee will be seeking legal advice at some stage of the process or you will have a worthless agreement. Without your agreement to contribute towards the employee's legal costs from the outset, you will probably slow down the process. It is therefore makes sense and is standard practice to offer to pay a fixed amount towards the employee's legal fees.
The fixed cost of an independent legal advisor is usually in the region of £200 - £500 + VAT. This amount is only payable upon the employee and advisor signing the compromise agreement. You should therefore view the fixed legal costs as an inevitable part of the financial package and not a separate item. After all, if the employee decides not to sign the compromise agreement and to commence proceedings in the employment tribunal, the employee is typically responsible for their own legal costs.
Compromise meetings with the employee
It is more likely than not that prior to a compromise agreement being offered a number of meetings will be held. This will certainly be the case in a redundancy situation, as you are obliged to conduct a consultation procedure prior to making the redundancies. For other dismissals, you will also want to have in place a proper procedure that is fair and reasonable.
It is useful to keep a record of what is discussed in the compromise meetings - as this may be used in evidence later. You should ensure you follow procedure and think carefully why you want to dismiss an employee - for more guidance please visit http://www.employmentlaw.co.uk/.
In order to be able to assess whether you are following the correct procedure and have a well drafted compromise agreement that the employee is likely to accept it is vital that you seek advice from an experienced employment solicitor. An experienced solicitor will guide you through the safest route to terminate employment and avoid a claim in the Employment Tribunal. For specialist, detailed advice on your employment rights and on the compromise agreement offered please contact Andrej Pungerl or Ruth Neil of Stone Joseph on 020 7854 9098.