Settlement Agreements

There are a number of reasons why a settlement agreement can be considered by an organisation. This can generally range from an unsuitability to the role or business to a practical commercial decision that the individual is not what the company require in that position.

It is fair to say that this can sometimes be a tricky and difficult process for the employers involved as there is usually emotion, shock and upset to deal with. The decision is of course not personal but a purely commercial transaction.

What is a Settlement Agreement?

A settlement agreement is something that is usually agreed between the employee and employer for a smooth transition whereby the organisation has made the decision for an employee to leave the company on a mutually agreed term.

When this decision is made this should then be approached from two angles. Firstly, the business has identified the problem and must work to negotiate the departure. This can usually include negotiating a financial offer, negotiating a reference and this should all be carried out in a without prejudice meeting, known in the industry as a WOP.

Subsequent to reaching an agreement with the member of staff and the handing over of work (if required) and when the member of staff has vacated the business then the next step is how to manage the loss of the ex-employee. This could be through an interim appointment or a permanent replacement to ensure the business does not suffer as a result.

Coming to a Resolution

A Settlement agreement really is about identifying a problem, dealing with it, adopting excellent negotiation skills and then having a plan to effectively move on in the direction you wish.

It is important not to allow emotions to overshadow the process and remain practical and remember that this is a purely commercial decision taking into account the needs of the business.

Providing all of this is followed, then a settlement agreement can be a straightforward and cost effective decision and can ensure dignity and respect is maintained.