Employee relations concerns can arise where the Council, as an employer, is unhappy with an employee's performance or their behaviour. They can also arise where an employee feels unhappy about the way they are being treated or the work they are being asked to do.
Generally, such issues should be resolved either:
informally through open communication or mediation or
formally through the implementation of relevant Council Policies such as the Disciplinary, Capability, Dignity at Work or Grievance Policies.
There can, however, be occasions where such approaches are not considered appropriate as it is viewed that there is a fundamental breakdown in the employee-employer relationship. In such exceptional circumstances, settlement agreements are a tool that can be used to deal with workplace problems, in helping to end the employment relationship in a mutually acceptable way, without resulting in tribunal proceedings.
What are settlement agreements?
A settlement agreement is a written agreement signed by both parties which, in exchange for an agreed sum of money and any other agreed terms, acts as a bar to the employee taking a claim to any court or employment tribunal. They should, however, be used as a last resort in resolving issues given the cost implications.
Consideration of case for a settlement agreement
Where a Service consider that an employee cannot remain in post regardless of any remedial action taken, then the relevant Head of Service/ Chief Officer should complete section A of the Settlement Agreement Assessment Form and liaise with Human Resources regarding this in the first instance.
- Settlement agreement assessment form
DOCX file, 14.8 KB
Thereafter, a case management discussion should be arranged involving Human Resources, Legal Services, and relevant representative(s) from the employing Service. This discussion will:
- consider the case for a settlement agreement as outlined
- explore options to resolve this using existing Council procedures
- quantify the potential costs of the employee remaining in employment/taking tribunal proceedings.
Where, following this discussion, it is considered that a settlement agreement is appropriate then section B of the Settlement Agreement Assessment Form should be completed and this should be submitted, recommending a maximum level of settlement, to the relevant Service Director / Chief Officer. The Service Director/ Chief Officer may, after reviewing the information available, determine that it is appropriate to set a different maximum settlement level.
The form should then be submitted for approval/comment to:
the HR Manager (or, where the value of any settlement is more than 6 months pay, the Director of Transformation, Communities & Corporate Services)
the Chief Finance Officer
Cases may also require to be referred to the Chief Executive in the following exceptional circumstances:
Where the value of any settlement is more than £75k and outwith the Council's normal voluntary severance authorisation process or
Where the financial business case is particularly limited, but a significant case can made be made for seeking a settlement agreement on other grounds, for example, detrimental impact on wider workforce.
The HR Manager (or the Director of Transformation, Communities & Corporate, when appropriate) and the Chief Finance Officer will determine which cases require to be referred to the Chief Executive.
Process for agreeing a settlement agreement
For a settlement agreement to be legally binding the following conditions must be met:
The agreement must be in writing
The agreement must relate to a particular complaint or proceedings
The employee must have received advice from a relevant independent adviser, such as a lawyer or a certified and authorised member of a trade union
The agreement must identify the adviser
The agreement must state that the applicable statutory conditions regulating the settlement agreement have been met
A template agreement is available from Human Resources which meets the above requirements however, as the circumstances behind each settlement issue vary, advice should always be sought from HR and Legal regarding the final wording of any settlement agreement.
Employees should be given a reasonable amount of time to consider the proposed conditions of the agreement and to obtain appropriate independent advice in this regard. The Council will contribute to an employee's reasonable legal costs in connection with the completion of a settlement agreement up to a maximum of £300 plus VAT.
In most instances, settlement agreements will arise out of a process of ongoing discussions with an employee about concerns. Any employee has a right to be accompanied at any meeting to discuss a settlement agreement by a work colleague or a trade union representative. When meeting to discuss a settlement agreement, it should be highlighted that any discussions about the proposed settlement agreement are protected and therefore expected to be inadmissible in relevant legal proceedings.
Settlement agreements are voluntary, and parties do not have to agree to them or enter into discussion about them. There can be a process of negotiation during which both sides make proposals and counter proposals until an agreement is reached or both parties decide no agreement can be reached. Often this can be between the employee's legal adviser and a representative from the Council's Legal Services.
Advice should always be sought from HR and Legal Services regarding any proposed changes to the wording of a settlement agreement and, if a settlement payment is proposed which is beyond the limit previously agreed, this should be referred back to the Service Director for consideration. A revised approval form in such circumstances will also be required with agreement from the HR Manager (or Director of Transformation, Communities & Corporate, where appropriate) and Chief Finance Officer.