Can I compromise on dismissals?

You want to get rid of a member of staff, but fear that dismissing them could lead to an Employment Tribunal. So what should you do?

Most recruiters will experience the situation where, without any serious incidents, an employee's conduct or performance is unsatisfactory and they want him or her to leave. They may not be confident they could justify dismissal in an Employment Tribunal or would prefer not to take the risk of becoming embroiled in time consuming and expensive proceedings.

Therefore, the recruiter may tactfully raise the possibility of a leaving 'package' being available if the employee would be interested. This suggestion should be raised 'off the record' (without prejudice). However, care must be taken to avoid the risk of the employee alleging at a later stage that the employer's mind was already made up and that any subsequent disciplinary or dismissal proceedings were a sham. Only if an employee expresses interest should terms then be discussed.

The amount offered by the employment business should be attractive enough for the employee to accept it rather than pursue a claim or stay put in the job. This will vary depending upon the strength and value of any potential claim and the importance to the recruiter of a negotiated settlement and early departure. Some recruiters will be confident in their own ability to negotiate figures and terms but, if not, advice should be sought from a solicitor specialising in employment law.

If terms are agreed, then before any money changes hands the employer should have them set out in a 'compromise agreement' to be signed by both sides as a binding settlement. In short, it is an agreement that, in exchange for a sum of money, the employment will terminate and the employee will not take legal proceedings.

So what does a compromise agreement contain?

Typically it contains the figure for the termination payment and a leaving date. There will usually be a 'gagging clause' so the employee is not to tell anyone the terms of their settlement. There may be a clause providing the employee will not make derogatory statements about the employer. There will be a separate amount for pay in lieu of notice. There may be reference to restrictive covenants and provision for returning company property. There will be paragraphs listing the employee's possible employment law claims and stating the agreement settles them all. There may also be an agreed reference attached.

The law provides that for these agreements to be binding the employee must have independent legal advice from a solicitor who signs to say that he has given that advice. Obviously employers want the settlement to be binding. They usually pay an amount which covers the employee's legal advice costs. However, that solicitor is not there to rubberstamp the deal. It is his job to explain the agreement and also to find out if the employee has potential employment law claims and how strong those claims are. He must advise the employee of the alternatives to signing. The main one usually will be a claim for unfair dismissal or discrimination. This should be explained so the employee can make an informed decision whether taking the money on offer is in his best interests.

If the termination payment is realistic, the compromise agreement has the advantage of certainty. The employee knows how much they are getting, whereas the outcome of an Employment Tribunal cannot be guaranteed. Thhe employee also leaves on amicable terms with an agreed reference.

The employee can try and 'tough it out' by staying in the job and not signing the compromise agreement. However, by that stage an employee will realise that their days are numbered at that particular company and that their future there is unlikely to be promising.

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