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Settlement Agreements: Offer With Extreme Caution

Stuart Markless

Stuart Markless

Only a month has passed since the introduction of Settlement Agreements and already we are seeing employers falling into the trap of believing that they can spring Settlement Agreements on employees without them being able to refer to having done this.

Last week I saw a middle-ranking employee working in an internationally known company who needed employment law advice in Crawley. This employee had complained to HR about a new manager. When he met with the HR manager to discuss the matter, he found himself in what was described by the HR manager as “a protected conversation” and being given a derisory offer to leave the company.

The HR Manager seemed to be confident that my client would never be able to refer to these conversations. I was able to advise him that “protected conversations” had not actually been incorporated into the final Acas Statutory Code of Practice in the way the HR Manager believed it had been.

It is only in a narrow set of circumstances, where someone is only claiming ordinary unfair dismissal, that an employee would not be allowed by an Employment Tribunal to refer to what had happened.

Furthermore, the HR Manager told my client that he only had 4 days to decide whether to accept this offer. When he rejected it, he was told that if his grievance against his manager went ahead and was not upheld, he was likely to face disciplinary proceedings.

This is likely to constitute “improper behaviour” by the employer by putting undue pressure on the employee. The Acas Guide to Settlement Agreements suggests giving an employee 10 days from receiving the proposed formal written terms. In this case, nothing had been put in writing and no mention had been made of any terms such as confidentiality.

In addition, the threat of disciplinary action, when all the employee had done was to raise a complaint against a manager, would also be likely to be seen as undue pressure.

Consequently I advised him that he should include these events in his formal grievance that he was intending to lodge about the issues he was initially complaining about.

By offering a Settlement Agreement in this way, the HR Manager has damaged their relationship as mutual trust and confidence is fundamental to any employment relationship.

The likely result is that these actions will contribute to a fundamental breach of contract, so that our client could go on to consider himself constructively dismissed. The upshot for the employer being a claim made against the company which could only be resolved by offering a much larger sum of money under a Settlement Agreement to compensate our client for his constructive unfair dismissal.

So, if you are thinking about offering a Settlement Agreement to an employee, make sure you understand the narrow circumstances in which you can introduce it and how the conversation can be “protected”.

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