Settlement Agreement Plans

Settlement agreement plans are set to change the way businesses operate. In an attempt to make the termination of employment more amicable, quicker and actually easier, UK businesses are left with no excuse for lagging job creation.

An employer can now offer an agreement of contract termination for a financial pay-off and even a good reference if said employment is ‘not working out’ or unnecessary.
The ‘offer’ and ‘reply’ will be submitted using an official government template, this reduces the risk of expensive tribunals for unfair dismissal as it is an offer of a mutual agreement. Not a black and white ‘you’re fired’.

The employee is therefore fully within their right to decline the offer and return to their job. However, how likely is this to be amicable?

After being notified that your position is no longer wanted in the company, it is unlikely that anyone would feel comfortable staying in such an environment and may even feel that they have no option but to accept the offer. They will then leave with a bruised ego, bitter feelings and less of a payout than perhaps needed.

In contrast, an employee may not want to leave and feels that their position is worth more than it is being credited at. In this case, higher pay-offs may be demanded and a tribunal will more often than not be called upon to settle the agreement anyway.

The main criticisers of this plan have worries that bad management will begin to take over. Employees may not have been managed properly or given the chance to learn from their mistakes and redeem themselves. It will inevitably be hard for employers to prove that they have done everything they can to ensure that an employee has been given enough chances, and this may actually increase the number of employment tribunal cases.

However, as Personnel Today suggests, the rising number of employees feeling less than fulfilled by their jobs may just give this plan a real purpose. It gives both sides a chance to be honest and open about what they have/can offer each other and sometimes it is more productive to move elsewhere. In a time where more people want flexibility in their roles, it may well provide much easier platform for an amicable parting of ways.

If you need any help understanding the need for Settlement Agreement Plans, the Department of Business, innovation and skills have published their consultation, answering many FAQ’s.