Key takeaways:
- Settlement agreements can save employers from employment tribunal, which reduces price, time and the potential for reputational harm.
- As an employer, you need to take into account whether or not, how and when you need to provide settlement agreements in the course of the redundancy course of.
- Many employers make settlement provides earlier than or in the course of the early levels of the session course of, as a substitute choice.
- Employers also needs to take into account taking particular authorized recommendation earlier than deciding whether or not to supply a settlement settlement in any specific circumstances.
Settlement agreements are an more and more in style technique by which employers can terminate the employment relationship on agreed phrases and guarantee this doesn’t result in employment tribunal claims.
That is no completely different within the redundancy context, the place employers generally provide settlement agreements to affected workers to keep away from the danger of unfair dismissal claims. These claims may come up the place workers dispute their roles are redundant and/or allege their employer has adopted an unfair process.
Nonetheless, employers ought to fastidiously take into account whether or not, when and the way they provide settlement agreements in the course of the redundancy course of, contemplating that workers are below no obligation to just accept them. In truth, there’s a danger that poorly carried out settlement discussions may exacerbate the chance of claims and the power of these claims the place the discussions are admissible in proof.
Whether or not to make a settlement provide
Settlement agreements can have many benefits for employers. Most significantly, they may defend them from employment tribunal claims, saving the time, price and potential reputational harm related to such proceedings. Additionally they permit the events to agree different exit preparations, resembling confidentiality obligations, references and inside/exterior bulletins.
Nonetheless, settlement agreements come at a value. There isn’t any incentive for workers to just accept settlement agreements which merely restate their authorized and contractual entitlements. Subsequently, workers will anticipate an enhanced quantity, often a number of months’ wage, earlier than agreeing to waive their proper to deliver claims. Employers are additionally anticipated to cowl workers’ authorized charges in taking recommendation on the settlement settlement phrases, which is important for it to be binding.
Subsequently, it’s finally a enterprise choice whether or not to supply settlement agreements, weighing up the chance and attainable worth of claims in opposition to the price of making enhanced funds. Because of this, employers who’re assured they’ve acted pretty in a redundancy course of might select to not take into account settlement. However, some employers might provide settlement agreements to all affected workers as a precautionary measure, whereas different employers might solely provide them to workers who’ve expressed discontent or threatened to deliver claims.
When to make a settlement provide
Within the redundancy context, one other potential benefit of settlement agreements is that they will keep away from the necessity to conduct a full session course of, which will be time-consuming and aggravating for either side. Subsequently, many employers make settlement provides earlier than or in the course of the early levels of the session course of, as a substitute choice.
Nonetheless, this naturally implies that any workers who settle for the provide won’t see the session course of by way of to its finish. This may very well be problematic if, for instance, an employer supplied settlement agreements to all affected workers however was solely looking for to scale back the variety of them performing a task. It additionally implies that they can’t be thought of for different vacancies which can have been appropriate had their present function been made redundant. On a sensible degree, some workers are doubtless to withstand settlement discussions at this stage, as an alternative preferring to conclude the session course of within the hope they might retain their employment.
For these causes, in some circumstances, it might be extra applicable to attend till the session course of has ended – and it has been determined whether or not and which roles can be made redundant – earlier than making settlement provides to the dismissed workers.
How you can make a settlement provide
In sure circumstances, settlement discussions will be stored ‘off the file’, which means they can’t be disclosed to an employment tribunal even the place the worker brings a declare. This would be the case the place the provide is made on a ‘with out prejudice’ foundation or as a part of a ‘protected dialog’.
So as to be ‘with out prejudice’, the provide should relate to a pre-existing dispute and quantity to a real try to settle it. This would possibly apply the place an worker has raised issues over the redundancy proposals/course of, however not the place their employer has positioned them in danger with out listening to their response.
A ‘protected dialog’ doesn’t require there to be a pre-existing dispute. Nonetheless, they’re admissible in discrimination proceedings, so would lose their worth the place the worker didn’t settle for the provide and subsequently linked their dismissal to a protected attribute, resembling a incapacity. As well as, a dialog will lose safety the place the employer engages in ‘improper behaviour’, resembling putting undue stress on the worker to just accept it.
Subsequently, it is necessary that employers take into account which route is extra applicable within the circumstances and they don’t try to make a settlement provide on an open, unprotected foundation.
Abstract
General, settlement agreements will be an efficient approach for employers to keep away from claims arising from redundancy processes. Nonetheless, employers ought to fastidiously take into account the broader circumstances to make sure they’re applicable, efficient and, even when unsuccessful, non-disclosable. Employers also needs to take into account taking particular authorized recommendation earlier than deciding whether or not to supply a settlement settlement in any specific circumstances.
Ethan Diver is a Solicitor at Taylor Walton Solicitors.
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