Commentary on Sections Summary and Background Section 23: Renaming of “compromise agreements”, “compromise contracts” and “compromises”
133.This section provides for the terms “compromise agreement” and “compromise contract” to be replaced with “settlement agreement” where they appear in specified legislation relating to employment matters.
134.Compromise agreements are a recognised way of dealing with an employment dispute, so that the matter is resolved in accordance with terms agreed by both parties. Provided that the applicable statutory requirements are met, the agreement is legally-binding and the issues covered by it cannot be the subject of a claim to an employment tribunal. Compromise agreements are referred to as compromise contracts in the context of the Equality Act 2010, but they operate in the same way as compromise agreements.