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It is that time of year when many businesses are approaching their financial year end. Managers and HR teams will be looking forward to next year’s budget. With people costs being the largest overhead for many companies, sights may be set on headcount reduction.

If you are a business owner or a manager tasked with implementing a decision to move someone on swiftly via a settlement agreement process, here are some do’s and don’ts to bear in mind, to ensure the process is as smooth as possible, whilst protecting the business from risk:

  1. Prepare thoroughly for that initial conversation, taking advice from your HR team or from external advisers in advance. Be careful not to use this process where there is a complaint of discrimination.
  2. Preface your conversation as being a ‘without prejudice settlement discussion’. This should ensure that the conversation cannot be referred to in subsequent court proceedings.
  3. Be sensitive to the fact that the employee may be shocked and upset. They may benefit from having something in writing to take away from the meeting which summarises the key points you will have covered verbally, particularly the financial terms.
  4. Don’t pressurise the employee to accept an exit arrangement or suggest that termination of employment is a foregone conclusion if they reject the offer. If negotiations break down, you must follow due HR processes without prejudging the outcome.
  5. Review the ACAS Code on Settlement Agreements which requires, for example, you to give the employee around 10 calendar days to sign up to the agreement.
  6. Ensure that the employee and any other staff involved internally are clear that they must keep the discussions confidential.
  7. Identify who in the business will be the contact point for the employee’s independent lawyer, who may ask for changes to the agreement before it can be concluded.

The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.