A new service launched this week by Agreement Online Ltd helps small companies avoid mistakes News International made when firing Clive Goodman & Glenn Mulcaire.

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Both Clive Goodman and Glenn Mulcaire were dismissed by News International without ensuring that they signed Compromise Agreements, a standard precaution which protects employers from almost all claims. Now it has become much easier and cheaper for companies to get a tailored agreement drawn up quickly when they are faced with the need to lay off employees

There has been much speculation in the press in recent days (1)(2) over the revelation that Clive Goodman was paid substantial sums in return for keeping quiet about certain internal proceedings at the ‘News of the World’. This was initially revealed in a written reply to the Parliamentary Select Committee in October 2009 (3), and several commentators have speculated that this is suspicious. However it is not al all unusual for ex-employees to agree to refrain from litigation and to maintain confidentiality in return for additional payment. Probably the biggest mistake that News International made was in failing to get a “Compromise Agreement” signed as part of the dismissal process rather than waiting for Goodman to threaten to take them to an Employment Tribunal.

They also told the committee that in both cases they “used a standard-form News International Compromise Agreement and only minor changes were made to it”. They would certainly also have been better advised to get an agreement drawn up tailored to the specific circumstances rather than reaching for a standard form.

According to specialist employment law solicitor Guy Thompson “Compromise Agreements have been in use since 1993 to make it possible for employees to agree to waive their statutory rights if they choose to do so. Naturally they are offered various incentives in return, which almost always include a cash settlement over and above that to which the company believes their claim was worth. There are generally a number of other obligations imposed on both sides by the agreement and these usually include confidentiality commitments. The precise terms of the agreement will depend on the particular situation, the nature of the business, and the events leading to the dismissal”. (4)

Of course, News International may well have had additional reasons for wishing to avoid the publicity and possible further revelations entailed in dragging these cases through the Employment Tribunal process, but no employer will relish the thought of the time and stress involved fighting these claims, or the uncertainty of the outcome. A Compromise Agreement is the established mechanism for ensuring a clean break and allowing both sides to feel comfortable with the negotiated mutually beneficial terms of departure.

Because everyone’s circumstances are different, it is unwise to rely on the use of a standard form, as News International did. Until now the alternative would be to instruct a solicitor to draw up a Compromise Agreement tailored to the specific situation, but now a new service provides the opportunity for businesses to get theirs drafted by running through an online questionnaire. Stuart Beattie, Technical Director of Agreement Online Ltd, says “By using sophisticated document assembly software only available until now internally within top Law Firms, we can take clients through an online interview process which leads them through all the options and immediately delivers a customised legally valid document. This not only saves time but also reduces their costs significantly”. (5)

The company’s website at http://Compromise.AgreementOnline.co.uk provides access to the document drafting process as well as giving useful background information on several employment law topics. It also includes an example template for a typical Compromise Agreement with explanatory notes.

Although online document drafting services such as legalzoom.com have been available in the US for some time, Agreement Online believes that this is a new innovation in offering a service this comprehensive and flexible to UK businesses. The company intends to expand the range of documents offered - with Shareholders Agreements, Tenancy Agreements, and Non-disclosure Agreements being likely additions to the service later this year.

1) Guardian 9th July: ‘News International: Lifting the veil.’
2) Telegraph 11th July: ‘News of the World phone hacking scandal: July 11 as it happened’
3) http://www.publications.parliament.uk/pa/cm200910/cmselect/cmcumeds/362/362we29.htm
4) Comment from principal of Guy Thompson and Co: http://www.GuyT.co.uk and http://www.CityCompromiseAgreements.com
5) Comment from director of Agreement Online Ltd http://Compromise.AgreementOnline.co.uk


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Derek Dearden
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