An Employment Compromise Agreement is a neat and popular piece of legislation. It's pretty much the Employment Law equivalent of a "no fault" divorce.
In return for a "sweetener" (up to £30,000) paid tax free by employer to employee, both parties agree to go their separate ways and refrain from saying anything unpleasant about each other in the future.
Once an agreement is signed, the former employee cannot subsequently lodge a case with an Employment Tribunal. That's a major plus for the employer. In return, both parties agree to keep the terms of the agreement secret.
The law insists on a number of specific requirements being followed in order for the agreement to be valid. See other FAQs for more information about validity.