If you’ve been asked to consider entering into a compromise agreement then you may have certain demands of your employer – one of these may be, for example, continued use of your company car after your employment ends (whether temporarily or permanently). In this post we’ll look at what a compromise agreement is, what forms of benefit you can expect under a compromise agreement, and whether you can use your company car after you’ve signed your compromise agreement. We’ll do so in the following order:

A compromise agreement is a form of contract regulated by statute. It allows an employer and an employee to settle a potential or existing dispute, with the employer offering some form of benefit (whether this benefit is financial or non-financial) in return for the employee agreeing to waive certain (or all) of their rights against the employer (such as the right to make an unfair dismissal claim). The employee should be informed by the employer that they should receive independent legal advice from a relevant legal adviser. The employer will normally contribute towards the cost of obtaining legal advice (in the range of between £250 and £600).

Broadly put, you can receive either financial or non-financial benefits under a compromise agreement. Financial benefits could include notice pay (or pay in lieu of notice), redundancy payments, holiday pay, compensation for the termination of your employment, or the continued use of contractual benefits (such as medical insurance, the use of a company car, or the use of company equipment such as a mobile telephone or laptop computer). Non-financial benefits include such things as particular agreements to confidentiality or the provision of an agreed reference to potential future employers.

If you already enjoy the use of a company car under your contract of employment you can agree with your employer under the compromise agreement an extension of the time period under which you’re allowed to use the company car. This arrangement can be either temporary or permanent (it’s more frequent for it to be a temporary measure). However, you should bear in mind that the provision of a contractual benefit such as this is taxable and you should therefore be careful for this eventuality to be covered in the terms of the compromise agreement.

London Compromise Agreement Solicitors are settlement agreement solicitors based in the City of London.