Advising an employer on negotiating a long-term employee's exit and settlement

David Dixey
Working in partnership with an aviation manufacturer's HR Manager and Directors

Employment Law specialist, David Dixey, received instruction from a local business who wished to negotiate a settlement with an employee, the aim being the exit of the long-term employee from the business, without exposing the business to the risk of a an immediate or future claim.

David is frequently instructed by employers who wish to be advised and guided on the proper (legal, procedural and practical) steps to follow during, often delicate, negotiations with employees regarding the mutual termination of their employment. Often this arises within the context of either conduct or performance related issues.

David received instructions from a local business who had been wrestling with the ongoing problem of an underperforming (but much respected) long serving employee. Should they:

  1. Initiate a protracted performance improvement plan (PIP);
  2. Commence disciplinary proceedings;
  3. Consider negotiations with the employee hopefully resulting in mutual agreement for their managed departure.

Achieving a negotiated settlement

The employer’s preference was to achieve a negotiated settlement so as to avoid a potentially risky PIP and subsequent disciplinary procedure. They wished to achieve finality and to ensure that any procedure followed (and settlement agreed) was binding and protected against possible future claims.

David subsequently worked closely with the employer’s HR manager to ensure that all discussions and negotiations between them and the employee were undertaken pursuant to the rules covering pre-termination negotiations under the Employment Rights Act 1996. This included assistance with drafting appropriately worded correspondence and (once settlement had been agreed in principle) drafting employment Settlement Agreement formally recording the terms of settlement agreed and including a waiver by the employee in relation to potential employment law related claims against the employer.

Additionally, David provided advice and guidance on the following issues:

  1. The status of pre-termination negotiations with the context of possible future Tribunal proceedings;
  2. Legal and practical issues surrounding “garden leave”;
  3. That nothing should be done to imply pressure upon the employee to accept the terms of the offer;
  4. That nothing should be said or done which might potentially give rise to an allegation of discrimination due to a protected characteristic under the Equality Act 2010 (sex, race, age, disability etc.);
  5. That acceptance of the employer’s offer of a termination payment was to be strictly conditional upon the employee signing a suitably worded Settlement Agreement.

The result:

Following Davids advice and assistance properly constituted negotiations took place between employer and employee resulting in the signing of a Settlement Agreement. The HR Manager confirmed that Holmes & Hills’ involvement had been invaluable in helping the employer achieve a swift and legally binding settlement between them and the employee.

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