Employment Matters September 2008

Let’s agree to differ, and go our separate ways

Parting with employees can be a very sweet sorrow. It will often be worth investing some time and money in making sure that the parting is permanent, and that you won’t be reunited in the employment tribunal in six months’ time.  The best way to ensure this is to settle any potential disputes before they get off the ground. 

Contractual and statutory claims

If all the parties needed to do was to compromise contractual claims then this could be a very short document given for consideration.  Employment law is more complicated than this however, and what is usually required is an effective way of contracting out of the plethora of legislation which gives rise to the various statutory employment rights.  This is usually drafted in such a way that an employee cannot just “opt-out” of his/her rights, except in a prescribed way.

Enforceable agreements

ACAS have special powers to broker agreements, and any agreement endorsed by an employment tribunal will be enforceable.  These agreements are only produced after proceedings have commenced, however, and by then the commercial reality of defending a claim can cloud an analysis of what it is actually worth.

For the employer who wishes to exclude the possibility and expense of a claim being brought in the first place the only watertight way to say goodbye is to enter a compromise agreement.  That way everyone knows when the end is, what the employee is entitled to and how much it will cost.

Employees should be aware that once they have entered into a compromise agreement it is very difficult to argue that they didn’t understand the terms, or were forced to sign, so if you’re not happy with the terms on offer, the advice is do not sign.

Play some “nice redundancy music”?

One of the trickiest aspects of persuading an employee to sign a compromise agreement is knowing when and how to raise the subject in the first place.

One employee was told that “should she decide that the job was beyond her capabilities” she could “resign on favourable terms”, and that in fact if there were any more customer complaints she would “very likely be dismissed”.  The employment tribunal was easily persuaded that her employer had in effect passed a no confidence vote and attempted to bypass the proper procedure.  She won her claim of unfair constructive dismissal.  

(Billington v Michael Hunter & sons 2003)

The initial meeting to discuss a compromise agreement should not take the form of a veiled threat.  It should be informal, without prejudice and approached with an open mind so that the termination of employment is not the only possible outcome.  Where appropriate proper dismissal procedures should be conduced simultaneously, but separately.

The “without prejudice” rule

There is a general rule that written and oral communications between parties which constitute genuine efforts to resolve a dispute between them cannot be admitted in subsequent legal proceedings if they fail to reach agreement.  The purpose of this rule is to encourage parties to settle.  There must be an actual dispute and the discussions must be a genuine attempt to settle it, or a tribunal might order that such evidence be heard.