‘Is this right?’ she asked me. ‘Can they really do this?’ ‘As far as I know he hadn’t done anything wrong, was good at his job and wouldn’t have just left without saying anything. I didn’t even get a chance to say goodbye!
That was the start of a call I received from a friend of mine recently on her way home from work.
My friend joined the company 6 months ago, loves her new job and had built up a good working relationship with her new colleague who was also her mentor. That day, as usual they ate lunch together and talked about new projects in the pipeline. By 3pm he was gone. She was simply told that he no longer worked there and that she would be moving to a new team. No further discussion allowed – ‘end of.’
My friend was shocked and unsettled by this incident. She suddenly felt very insecure about her own job prospects and said she now saw the company in a new light. ‘Is this how things really work around here?’
Given the suddenness of her colleague’s departure, I surmised that my friend’s colleague had left under the terms of a Settlement Agreement.
Settlement Agreements are legally binding Agreements that provide a confidential and mutually risk-free way to end an employment relationship. They are often used to settle a dispute between the employer and employee. For example, as an alternative to undertaking formal employment proceedings such as disciplinaries and grievances. However, they can also be offered to employees where there is no dispute. For example if there is a personality clash.
Basically, the employer would have a ‘protected conversation’ and seek to begin ‘without prejudice’ discussions with their employee about how to bring the employment relationship to an end.
Employees are usually compensated financially in exchange for agreeing to leave employment and not pursue any claims against the employer through an employment tribunal. The confidentiality clauses contained within the Agreements prevent both parties from discussing the existence or content of the Agreement or from making disparaging comments about each other.
Employees don’t have to agree to accept Settlement Agreements and cannot be forced or threatened with them.
Where an employee does agree, they must receive independent legal advice before the Agreement is finalised. This advice is, in my experience, usually paid for by the employer.
Settlement Agreements can be a wonderful bit of kit to have in your armoury when trying to resolve workplace issues. I’ve used them on many occasions over the years. They’ve saved money and time. They have also prevented disputes from effectively disabling teams and negatively impacting the productivity of other staff.
I remember when I joined one company a few years ago, the staff kept referring to the ‘Disappeared’. The reference to the staff who were there one day and gone the next. Nobody had an opportunity to say goodbye and their names were seldom if ever mentioned again. For some, they said it felt like going through a ‘grieving’ process.
This had a damaging effect on workplace culture, trust, confidence and loyalty. Staff were looking over their shoulder, wondering who was going to be next.
Additionally, some staff who might already have been planning to resign started to see Settlement Agreements as a way to leave the company with a bit of cash. Better still if they performed badly! The unions also began to expect that staff would be paid to leave.
Settlement Agreements can seem like a relatively cheap solution to an employment situation. However, it’s important to be mindful of potentially longer-term costs which include recruitment, training and staff engagement. All of which can hit your bottom line.
Like all good things, Settlement Agreements should be used judiciously. They should not be used in lieu of good management practice.
Written by Erica Burke – Director of the HR Dept Solihull.
If you want expert advice on using Settlement Agreements or advice on how to deal with difficult workplace issues, please contact the HR Dept Solihull. www.hrdept.co.uk/solihull 0121 217 8038.
