It’s not working out

The termination of employment can be a tricky business and will almost always carry the risk of employment tribunal claims. Of course, if there is a genuinely fair reason for termination, such as gross misconduct or redundancy, the risk of an employee bringing tribunal proceedings will be minimal, but it is never completely non-existent.

It is this underlying risk which encourages many employers to use settlement agreements to limit the risk of any future claims by their ex-employees.

Settlement agreements (formerly compromise agreements) ensure that employees who sign them waive their rights to bring a claim against their employer. In return, employers pay compensation which the employee may not otherwise be entitled to.

Since the concept of ‘protected conversations’ was introduced in 2013, it has become much easier for employers to initiate severance discussions without the worry of prompting a constructive dismissal claim if the agreement is not signed.

If you make an offer to, or hold discussions with, an employee whilst they are still employed, with a view to ending that employment on agreed terms, that can amount to a ‘protected conversation’. Its effect is very similar to a ‘without prejudice’ conversation in that an employee cannot refer to it in support of a subsequent unfair dismissal claim if the negotiations fail.

However there are limitations; the conversation will still be admissible in a claim for discrimination. It could also be admissible in any claim if, for example, undue pressure has been put on the employee to accept the proposal. As a result, employers should take legal advice before starting a protected conversation.

Jenny works in our employment law team. She helps clients with the full range of employment related matters including TUPE, defending tribunal proceedings, contractual matters and general employee relations and HR work. She has wide experience working for SMEs, owner-managed businesses and organisations employing in excess of 1,500 staff across the UK.