What are employment settlement agreements?

Settlement Agreements are the new name for Compromise Agreements as from 29 July 2013. Here’s what every employer should know about the new rules:

What did the old law say?

Previously, it was only possible to have a ‘without prejudice conversation’ if the employee and employer were already in dispute, for example during a disciplinary process.

Any suspicion that you have made you mind up to dismiss before a fair process is followed risks a claim of unfair dismissal.

If you decide to approach an employee with an exit offer (via a Compromise Agreement) prior to any disciplinary process you run the risk of an accusation of constructive unfair dismissal.

What does the new law say?

From 29 July 2013 it became lawful to have ‘pre-termination negotiations’ with an employee with a view to ending their employment by agreement.

Previously known as ‘Compromise Agreements’ these agreements have been renamed ‘Settlement Agreements’.

There are, of course, caveats to pre termination negotiations.

How to get Settlement Agreements right?

There must be no ‘improper behaviour’ on the part of the employer. There are time limits to ensure there is no undue pressure on the employee to accept. If any of the rules are broken the negotiations lose their protected status and can be used in a Tribunal hearing.

Tips for disciplinary meetings?

If the matter is serious enough to warrant dismissal you must follow a fair process, give the employee the right to a fair hearing, to be accompanied and to appeal any decision.

When you have an issue of discipline or performance to deal with you must keep an open mind during any disciplinary process.