Since the end of July this year, employers have been allowed to offer their staff a severance package to go away without the risk of this being raised at an employment tribunal, in much the same way that "without prejudice" offers of settlement cannot be referred to in court cases. Whilst this may seem a small measure in itself, a number of employers have taken to this new freedom with enthusiasm.
Realistically it is very difficult for employers to tackle under-performance. They can start a formal conversation, have a series of meetings and issue appropriate warning letters, but it is all rather difficult. The employee will often go off sick with stress as a result, and the process unravels, ending with a resignation or dismissal on medical grounds, and a resulting tribunal case. Tempting just to offer a severance package at the outset.
But what if they say no? The last thing the firm wants is all this being dragged up at an employment tribunal. "All these meetings and warnings were a sham!" they can say, "they tried to get rid of me with a pay-off at the start!"
So, settlement offers have traditionally been generous enough to make it pointless to complain – it would have to be an offer they couldn’t refuse. And offers of this sort would rarely result in any horse-trading. It could be a yes or no, and usually a yes.
Now though, the gloves are off, and employers can try their luck. Some clearly are, and the logic is hard to fault. Instead of going through a redundancy consultation exercise, a firm could now identify their weakest link and approach them with a settlement agreement. The worst that can happen is that they say no.
As a result, such offers can come out of the blue. Employees can be shocked at the news and also at the size of the payment, not realising it may be an opening offer. In two cases this summer, clients have reported receiving the tap on the shoulder just before going on holiday, and then saying nothing about it to their families while away so as not to spoil the holiday. As negotiations dragged on, one client reported leaving the house at the same time every morning in suit and tie so that his family would not see that he was being made redundant. In another case a long-serving employee refused the company’s offer, they refused his counter offerand so he just went back to work as before.
Some will welcome this new free-market approach. Others will find the threat to job-security unacceptable. But what sort of working relationship can you have with a firm which periodically offers you money to go away? And is it right that you can't mention this to an employment tribunal if they eventually lose patience and dismiss you?
If you would like further advice, please call either James Twine on 01752 292351 or Eoin Fowell on 01752 292350 for a free initial telephone consultation.