Employers are frequently faced with the challenge of ending an employment relationship which is no longer viable:
- Restructuring has resulted in a surplus of staff
- Serious personality clash which is disrupting the workplace
- Performance issues that are not suitable for normal disciplinary action
It is possible to negotiate a deal and avoid ending up at an Employment Tribunal. The employer usually instigates a negotiation to try to reach a mutually acceptable solution. If successful the result is a ‘Settlement Agreement’ that sets out the terms agreed between the employer and employee to end the employment relationship.
The key features of a Settlement Agreement are:
Mutual consent – the parties enter the discussion in good faith with the intention to reach agreement, however, they are free to withdraw at any stage up to the final signing off.
Legal Agreement – the intention is to create a legal agreement which waives all rights and obligations relating to the employment relationship, including the option of tribunal hearing, in return for financial compensation.