Settlement Agreements to exit employees
Help is at hand for businesses to exit difficult employees.
Every business has an employee who isn't performing or simply no longer ‘fits’. Previously, there had to be an existing dispute before a 'without prejudice' discussion around what was know as a compromise agreement could begin. Now, we have a settlement agreements, which can be introduced by either the employer or employee allowing talks to end their employment to begin.
Settlement Agreements allow you to have confidential termination negotiations with employees without the risk of the details being used as evidence in the event of a Tribunal.
Like compromise agreements, Settlement Agreements are legally binding. They must be in writing, set out the issues to be "settled", be checked by an independent legal adviser and list the types of future claim you want to prevent. The employee usually receives a financial payment, together with an agreed reference.
The guidance from ACAS is to give employees a reasonable period of time to consider any offer - they suggest 10 days. ACAS also suggests that an employee is allowed to bring a work colleague to any settlement agreement meetings. These are best practice suggestions rather than legal requirements but we recommend they're followed.
Does that mean all termination discussions are protected?
No it doesn’t. Whilst the settlement agreements give you more freedom to have discussions around termination of employment, the regulations don’t apply to automatically unfair dismissals, or if there has been improper behaviour, such as fraud or undue influence.
What should you do if you want to exit an employee?
Consider the alternatives first. If they are not practical, proceed with care. Prepare well and check that any offer and any agreement is in line with ACAS guidelines. One size definitely does not fit all.
Secondly, ensure that any discussions are controlled closely. Be firm but be prepared to listen. A "sign it or be sacked" approach will take you down absolutely the wrong track - don't go there.
Document your offer in a formal settlement agreement and have your employee take it to a qualified person. Once everyone has signed the document, make any agreed payment and wish your ex-employee the best.