The Chartered Institute of Personnel and Development (CIPD) has welcomed the Government’s decision to make it easier for small businesses to enter into settlement agreements with underperforming employees.
It has announced that it plans to work with Acas to ensure that guidance for employers on the procedures to follow before entering a settlement agreement offers effective protection for good management practice and promotes positive relationships in the workplace.
Employee Relations Adviser at the CIPD, Mike Emmott, said:
“The CIPD has always supported the use of compromise (now “settlement”) agreements where both employer and employee agree that the relationship between them has reached the end of the road.
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“Settlement agreements can give both sides a way of terminating their relationship without the mutual recriminations that often accompany claims to an employment tribunal, and without exposing the employer to the risk of a subsequent claim.”
He added:
“We support the Government’s intention to make it easier for small employers to enter into settlement agreements, and to give all employers more confidence to embark on the conversations needed to initiate such agreements.”
Emmott went onto say:
“Our members have expressed concerns that a quick and easy route to terminating employment might undermine good management practice, which is for the employer to look for alternative ways of resolving issues with the employee before deciding to set about ending the relationship. If employers were to see settlement agreements as an attractive substitute for the sometimes protracted process of discussing ways of improving performance, it would do little to improve workplace relationships.
“The CIPD has therefore urged the Government to require an employer to engage in some formal process before making a settlement offer, in order to avoid an employee learning that he or she is at imminent risk of losing their job without warning and without having the opportunity to do anything about it.”
He concluded:
“We are disappointed to see the Government thinks that imposing formal requirements on the employer prior to the offer of a settlement could move the dispute resolution system back towards something like the statutory “3-step process”, which didn’t work and was repealed in 2009.
“However we welcome the Government’s intention to work with Acas to set out guidance on how the use of settlement agreements sits within broader good management practices and the type of good practice it is expected that businesses will normally follow.
“We look forward to working with Acas to try and ensure that the proposed guidance offers effective protection for good management practice and promotes positive relationships in the workplace.”
