A transaction agreement (formerly known as a compromise agreement) is legally recognized as a legally binding contract between the employer and the worker, either towards the end or shortly after the end of the employment. It sets out the terms of exit between the parties and prohibits the worker from taking action against the employer because of his employment and/or dismissal. This is usually in exchange for a termination payment and other benefits, which are also stipulated in the agreement. The main advantage of entering into a transaction agreement is to create security between the parties and create a clean amicable break with your employer. Without exception, you will receive a tax-efficient payment under the contract, as well as an employment reference and clauses to ensure that your employer does not pay you badly. In return, your employer can ensure that you will not assert rights against them in the future. The transaction contract becomes mandatory only when you have received independent legal advice, usually from a qualified lawyer, and that lawyer has attached a certificate confirming the advice granted. After the conclusion, it is as if an employment tribunal had made an order at the full hearing – there is no turning back. Transaction agreements can be used in many cases, including the following (whether or not there is prior litigation): they may be very satisfied with the offer of a transaction contract.
You must obtain legal advice before signing, but nothing else prevents you from signing the proposed transaction agreement. Similarly, you do not have to accept the offer. As the CASA code of conduct for transaction agreements makes clear, transaction agreements are optional. You can enter into a negotiation process to get a transaction that satisfies you or simply refuse any discussion. The contract is “contract-based,” i.e. it does not hire the employer or the worker until it is signed. A comparison system can be beneficial for both parties.