Settlement Agreement Scenarios

These are many employment situations where Settlement Agreements can be used:

1) Redundancy

The law can be tricky on how a redundancy selection process is carried out – this is the area that gives rise to most claims to the Employment Tribunal in these types of case.

Rather than embark on such a process and get it wrong, many employers will offer an enhancement to the Redundancy package to those affected. This can be made more advantageous to the employee by being offered tax-free.

2) Sickness

An employer can be sympathetic to someone’s misfortune in being off ill, but also have practical problems keeping their role vacant, e.g. only being able to recruit a temporary replacement.

In this situation, the employer may genuinely want to offer a ‘package’ to bring the employment to an end. The employee may want this too. Goodwill can be maintained.

In more difficult long-term absence situations, the employer may have to take specialist advice on the effect of the Equality Act, which creates duties on employers not to discriminate against someone who is defined as ‘disabled’. A Settlement Agreement would resolve these issues.

3) Performance Issues

Anyone who has been employed for more than two years has to be performance-managed before their employment can lawfully be brought to an end for this reason.

The removal of the maximum retirement age means that it is no longer an option to let someone who is struggling to adapt to new technology to simply serve their time. But to discipline a long-serving member of staff may be something that nobody wants to do.

As with the sickness scenario above, employees in these situations may actually welcome being approach on a ‘without prejudice’ basis to discuss whether they would enter into a Settlement Agreement.

4) Personality Clashes

It can be hard to explain – staff who are perfectly well-behaved in all other situations just send each other off the deep end, potentially leading to weeks of disruptive meetings, grievances, attempts at mediation, and re-organisation.

Particularly in the smaller organisation, there may ultimately be no practical way forward than for one side of the argument to depart, but a disciplinary process is only going to extend the arguments.

5) Misconduct

There may have been wrong-doing which warrants dismissal, but the evidence is not clear-cut, the employee denies any involvement, and has previously been of good character. Or the way in which the information has come to light (e.g. through a tip-off) is not something which the company does not want to have to disclose if the matter goes to an Employment Tribunal.

The flexibility of a Settlement Agreement is that it can be proposed before any disciplinary process is embarked upon – and such a step would not interfere with a later investigation.

Contact our Employment Lawyers in Glasgow today 

At Livingstone Brown our employment law are experts in approaching employers and negotiating exit packages for our clients.Contact our employment law team today and one of our solicitors will be happy to help. Call us on 0141 429 8166 or complete our online contact form.