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Exiting employees – safely

The abolition of tribunal fees and the inevitable increase in litigation means employers should use extra caution when approaching employee dismissals whether by redundancy or any other reason.

The abolition of tribunal fees and the inevitable increase in litigation means employers should use extra caution when approaching employee dismissals whether by redundancy or any other reason.

Clearly dismissals for gross or repeated misconduct, short term frequent absenteeism, or generally in the case of employees with less than 2 years’ service will still be possible (providing a fair process is followed) but employers (and particularly smaller employers) will always want to find a way to achieve a dismissal quickly and with the minimum of fuss and risk. While there isn’t a magic wand, the voluntary exit has been the closest thing to it we’ve had.

At myHRdept we have managed numerous voluntary exits over the years for employers who find themselves with too many people or people with the wrong skills. By encouraging the employee themselves to request an exit, risk is hugely reduced. In recent years we’ve developed ‘voluntary exit agreements’ and used these to great effect. Under such an agreement an employee is typically warned that a process ‘may’ place them at risk but that as an alternative to their (possibly) leaving with statutory exit terms they can opt instead for a voluntary agreement on enhanced terms. Once the agreement (effectively a request for a voluntary exit) has been signed the job is more or less done. Only once have we known an employee challenge the legality of the agreement subsequently. A risk of this approach however is an employee who claims that the approach itself amounts to a breakdown of trust and confidence justifying a constructive dismissal claim. If the conversation is carelessly handled, it might indeed result in a successful claim.

Given the increasing risk of litigation following the abolition of tribunal fees we may now prefer a more formal Settlement Agreement route. There are a couple of extra hurdles to this. The conversation has to be held in a particular way, reference needs to be made to the appropriate area of law (S111a, Employment Rights Act) and there are statutory time limits for the employee to consider their options. To qualify as a confidential conversation the employer must not behave ‘improperly’ which will include for example telling the employee that if they don’t sign the agreement they will be dismissed. Lastly the Settlement Agreement must be countersigned by an authorised advisor (a solicitor normally) and the employer will be expected to pay for that advice, which can cost from £350 to £5,000 or more for complex cases and protracted negotiations. The advantage of a Settlement Agreement though is that once it’s signed it is legally binding – the voluntary route involves a leap of faith, albeit it will still be suitable in some circumstances.

Whether to use a simple voluntary exit agreement or a more involved Settlement Agreement is a matter for individual case assessment. Outside of restructurings etc. where these agreements may be suitable, dismissals need to follow a fair process, but for absolute peace of mind the employer may want consider a suitable agreement even in cases where an apparently fair dismissal results from conduct or performance issues.

To minimise the risk of successful claim against you, we offer the following tips:

  • Take advice from myHRdept at the outset
  • Be prepared to put some time into the process
  • Identify (with myHRdept’s help) the correct procedure and follow it
  • Consider asking for on-site assistance at critical stages – dismissal or appeal hearings
  • Ask your HR provider to draft all letters (invites to hearing and outcome) for you. If they don’t do that, or send you a template, time to think about changing provider (myHRdept send finished letters, not templates)
  • Allow plenty of time for stages to complete and for employees to prepare – don’t rush it
  • Give the employee plenty of opportunity to explain themselves and listen to what they say
  • If there’s any hint of health concerns being the underlying cause, consult myHRdept
  • Be open minded to alternative employment opportunities
  • Always try to part on good terms and always allow an appeal

If you’re thinking of outsourcing your HR why not contact With full service Premium Plus packages from only £140 per month (and start-up packages from just £80 per month) and fixed price HR support options available for one-off issues, we believe we offer the best combination of quality and price available in the UK. Call us on 01628 820515 to discuss your requirements contact us and we’ll call you back.

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