Home » Settlement Agreements From An Employer’s Perspective

Settlement Agreements From An Employer’s Perspective

Time Stamped Show Notes:

34s: Lynda runs an HR company called Empact which stands for employment advice consultation and training. She usually works at the client premises and her work involves anything from induction training to dismissing employees.

1min 17s: Larger employees usually have their own HR departments but Empact is there as and when needed.

2min 23s: Why does she work in HR? She loves dealing with people, persuading them how to deal with a situation.

2min 51s: How is Empact different from other HR companies? Their strapline is “always by your side” they behave as if employed by that company and make sure it is cost-effective for the employers.

3mins 43s: What is a settlement agreement? It used to be called a compromise agreement but it changed a few years ago. It is an agreement between an employer and employee for the employee to leave the business and involves a consideration of money for them to leave. It also signs the employee’s rights away for them to pursue an employment tribunal claim.

4mins 33s: Do employers like settlement agreements? Some use it as a first resort, it is better than going through the disciplinary process.

5mins 6s: What are the advantages? The assuredness that the employee won’t pursue an employment tribunal claim. They have 3 months from termination to contact ACAS and it can be extended to 5.5 months by early conciliation so it takes the stress away knowing they won’t pursue a claim.

6mins 45s: How do the confidential provisions work? There are restrictive covenants in settlement agreements such as the employee won’t damage the business and they won’t speak ill of each other.

8mins 10s: How much money should an employer offer? Settlement agreements save money, the disciplinary process could take 6 months so at no extra cost to you, you could offer 6 months salary and save money as you won’t be taking the time to go through the process.

9mins 16s: If the employee could be dismissed, why would the employer pay them? Should they pay the contractual notice or more? You should pay the notice period and add on the amount the employee might be due to if they were to be made redundant. Then add on for the benefit to the company of getting rid of that employee now and then maybe a bit more to make it look attractive. It is different for each employee.

10mins 44s: What if the employee reject the settlement agreement? You have to think why you want rid of them in the first place but explain the settlement agreement at the beginning and that you want that over a disciplinary process. Even if they refuse, they can’t bring up that conversation in a court of law.

12mins 27s: If the employee is leaving with a settlement agreement, what should the employer do about a reference? Put the facts – they worked here from this date to that date in this position and they left the company. If they want to put something nice then something like “they always did everything to the best of their ability”.

13mins 44s: What about the announcement of the employee’s departure? They are confidential circumstances but you should put up a notice, as everyone will wonder, saying something like “… has decided to pursue their career outside the company and we wish them all the best”.

14mins 41s: What about the disadvantages of a settlement agreement? Might cost you slightly more money but it gives you peace of mind that there would be no employment tribunal with a signed agreement.

15mins 28s: What about the employee’s legal fees? The employer should make a contribution of about £200-300.

16mins 3s: Are there any tips for employers? Always be honest with your employees, they might even improve enough that you want to keep them.

17mins 0s: Find out more about Lynda’s services at empact.biz they can help with anything from settlement agreements to any process to do with employees in your business.

lynda-fenton

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