How to approach pre-termination negotiations about a settlement agreement

Author: Darren Newman

Summary

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• Recognise that a negotiated settlement can be an attractive alternative to a formal procedure.
• Understand the "without prejudice" principle and be aware that it applies only in relation to an existing dispute.
• Understand the effect of the rules on protected conversations under s.111A of the Employment Rights Act 1996.
• Be aware of the circumstances in which pre-termination negotiations will not be protected by s.111A and will be admissible evidence in a tribunal.
• Depending on the circumstances, consider whether to begin a performance improvement, disciplinary or redundancy procedure before initiating a settlement discussion.
• Act reasonably, with a view to being able to defend an unfair dismissal claim even if the pre-termination negotiations are found to be admissible.
• When initiating a conversation about terminating employment on agreed terms, make clear that this is only one option, and termination is not the inevitable result.
• Following a conversation, set out the details of any offer in writing, emphasising that no decision has been made at this stage.
• Give the employee time to consider the offer.
• If the employee does not accept the offer, continue with the relevant formal procedure.
• If the employee does accept the offer, confirm the terms using a settlement agreement.