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Can Settlement Agreements Lead To Constructive Dismissal Claims?

Fiona Martin

Fiona Martin

Employers are in danger of exposing themselves to constructive dismissal claims when offering Settlement Agreements.

Last week an employee who needed Settlement Agreement advice in Crawley came to see me. He works for a national organisation which recently merged with a smaller one in Crawley.

Our client “Alan” raised issues about his new manager “Sophie” because she was talking to him inappropriately. In addition, Sophie was giving his female clients to female members of the team despite the fact that there was no policy which stated that vulnerable female adults should be supported by same sex workers.

Alan emailed his managers about this and the HR Manager “John” asked him to submit a grievance. He advised that he was concerned that if he did he would be victimised, but did as he was asked.

John called a meeting with Alan where he and another manager told him that they were investigating Sophie’s complaints that he was not accounting for his whereabouts. In fact, our client had seen his GP during his lunch and difficulties accessing his diary were due to IT issues.

Prior to his grievance hearing taking place, John phoned Alan and advised that he wanted to offer him a confidential Settlement Agreement and wanted to meet immediately to discuss this.

Alan advised that he was on holiday and could not meet until 2 weeks later as he also needed to speak to his union.

Alan then attended an investigation meeting into his grievance and was told by a manager that they wanted him to “feel welcome” as his organisation had been taken over by the larger one. He informed them that a Settlement Agreement containing an insulting offer had been made to sever his employment, so he did not feel very welcome. They were unaware of this.

After this grievance meeting, John formalised the offer of the Settlement Agreement by writing to Alan. This letter was headed “Confidential Settlement Proposal” and mentioned that there were issues regarding Alan’s alleged misconduct and invited him to a “without prejudice meeting”.

The employment team meeting to discuss a case

The employment team at Martin Searle Solicitors

Although the letter was careful to say that it was his decision whether to accept or not, at this meeting with John he was only given until the following day to decide whether he wanted to accept their settlement proposal. In this meeting John threatened Alan that if he did not accept they would commence disciplinary proceedings against him. This is despite the fact that many of the conduct issues raised against him were trivial and not proven.

Alan wrote to John because he did not feel he could make a decision without seeing the actual wording of the Settlement Agreement and he needed more time. He was then signed off work by his GP due to “workplace stress”.

We advised Alan that as he had raised issues about being treated less favourably than a woman in his grievance, his claims did not fit the narrow circumstances in which an employer could rely on secrecy around the offer of the Settlement Agreement.

It also appeared there had been improper behaviour in the form of putting undue pressure on him. This was due to the initial short timescale to decide, but also (and more importantly) because they were only threatening disciplinary proceedings for trivial issues that had not yet been fully investigated.

Alan felt that their actions had lead to his trust and confidence in his employer breaking down. Subsequently he added the way in which the Settlement Agreement had been offered to his existing grievances, as he no longer felt he could work for the organisation.

This is yet another case where an HR manager has not understood the very narrow set of circumstances in which they can rely on an employer not being allowed to produce evidence of their offer of a Settlement Agreement to an Employment Tribunal.

Consequently, we are currently asking for a lot more than the derisory compensation offer initially offered to Alan under the terms of the Settlements Agreement. If this is not forthcoming or his grievances are not upheld then he is likely to resign and claim constructive unfair dismissal.

Employers need to ensure they are fully aware of the law surrounding Settlement Agreements before offering them to their employees. Given the narrow set of circumstances in which employers can rely on secret conversations, they would probably be better served by not doing or saying anything that an Employment Tribunal might find unfair!

About the author

Fiona Martin

fiona-martin

I lead the employment teams in our solicitors’ offices in Brighton, Eastbourne, Shoreham, Gatwick & Crawley and Croydon. As founding Director, I am also responsible for the firm’s marketing. I provide expert opinion for the press, disseminate employment law round-ups through my employment law blog and campaign on important issues such as maternity and disability discrimination. I train employers and HR professionals to be best practice managers and I am also a CEDR accredited mediator.

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