People management is not easy. If you find yourself dealing with a tricky situation or employee, or you are frustrated that it is taking longer than you would like to deal with a HR issue, such as poor performance, you may be wondering if there is an alternative commercial route that could benefit your business. If this sounds familiar, a settlement agreement may be the solution you are looking for.
New to settlement agreements or would like a quick reminder?
- Settlement agreements – what are they?
- When are settlement agreements commonly used?
- How can Kingfisher help?
Settlement agreements – what are they?
In outline, a settlement agreement is a legally binding contract voluntarily entered into by an employer and an employee in which it is agreed that in exchange for a sum of money the employee will not bring claims covered by the agreement against the employer. Usually, the parties also agree that the settlement agreement will end the employment relationship, allowing a clean break.
As you would expect, there are some legal requirements that need to be met for the agreement to be legally binding (including the employee receiving independent legal advice) and it is important that it is carefully and appropriately drafted to meet the needs of your business.
When are settlement agreements commonly used?
A settlement agreement can be an attractive option for businesses in a variety of situations. Some of the more common ones where employers consider using settlement agreements include:
- Performance management or ill health cases where the business does not wish to undertake what could be a lengthy process
- Disciplinary cases where the business is unlikely to be able to secure a safe dismissal
- Situations where there is a risk of a successful claim being brought against the business such as where harassment has occurred
- A redundancy situation where there is an enhanced payment available to encourage employees to take voluntary redundancy
- A need to exit a senior employee or a wish to do so in an amicable way
If you think a settlement agreement may be the way forward for a situation in your business, as a first step you should get in touch with us for specific advice, not least because it is important to ensure you have the information you need before approaching the matter with the employee. There are rules around settlement agreement conversations so being aware of these, how they operate and any implications for your situation is vital.
How can we help?
Here at Kingfisher Professional Services Ltd we have a specialist settlement agreement service available just for employers. We can advise you on the facts of your case, including settlement agreement discussions and the rules around these, draft a bespoke settlement agreement to meet your needs and negotiate with the employee’s representative on your behalf in accordance with your instructions.