When it comes to making redundancies or dismissing employees for capability or conduct reasons, many employers offer Compromise Agreements to minimise the risk of litigation.
However, a Compromise Agreement is not the solve-all many employers think it is and there are pitfalls.
So if you are considering offering a Compromise Agreement proceed with caution and take legal advice.
In particular, be aware of the perils of off the record or without prejudice Compromise Agreement negotiations.
An Employment Appeals Tribunal ruling means discriminatory comments made during without prejudice discussions where there is no dispute are admissible as evidence.
This is also likely to be the case where the employee is being performance managed.
So while Compromise Agreements can be useful for ensuring a speedy settlement, if offered in the wrong circumstances or in the wrong way they could just as easily result in a time consuming grievance and a much higher settlement sum.
Here are our tips for those all-important without prejudice negotiations.
Stay focused Limit conversations with the employee or employees solely for the purpose of trying to settle a dispute.
Even if you have requested a without prejudice conversation ensure you do not make discriminatory comments or embark on discriminatory conduct.
If you do, it could be used against you in evidence in any subsequent unfair dismissal or workplace discrimination proceedings.
Keep a record Take notes at all meetings including without prejudice meetings.
Record and explain how a Compromise Agreement came to be discussed or offered.
It is much better for you as the employer if the employee comes forward with an offer to leave on mutually acceptable terms.
If this is recorded at the meeting, there cannot be any suggestion you offered the Compromise Agreement as an alternative to dismissal.
Follow a fair process If there is an ongoing redundancy exercise or disciplinary or capability proceedings you should continue the process.
By following redundancy procedures or the Acas Code, should the negotiations break down you will be protected against any claim that you failed to follow a fair process.
Avoid ultimatums Avoid a take-it-or-else ultimatum.
If the employee brings a discrimination claim they could argue that the way you offered the Compromise Agreement was victimisation and so discriminatory.
Don't assume you are in a dispute It is important to remember that just because an employee raises a grievance or you are concerned about an employee's performance, it does not mean they are in dispute with you.
The grievance could subsequently be upheld or dismissed in an acceptable way for the employee or the performance review successfully completed.
If that happens your without prejudice discussions could be admissible as evidence in any Employment Tribunal proceedings.