Employment law

Pre-termination negotiations and settlement agreements

Pre-termination negotiations take place when an employer and employee might both welcome the termination of the contract of employment.

25 January 2016

Student at a coffee shop working on laptop

They can be mutually beneficial as they can help avoid a disciplinary or a lengthy, formal termination process.

What are pre-termination negotiations?

Pre-termination negotiations are where the employer makes a financial offer to an employee to leave their employment. They are set out under terms that should be mutually agreed and then recorded in writing in a settlement agreement.

They were introduced to allow the possibility of ending an employment relationship when there is no previous dispute between employer and employee without the concern that either will use the discussions in any later legal proceedings.

Before this legal provision was introduced in 2013, pre-termination discussions would only be excluded from any later legal proceedings if a dispute already existed between employer and employee.

An exit offer with a severance package could be attractive for an employee with concerns about their work performance or a worker who’s had a grievance raised against them.

What are common problems with pre-termination discussions?

In order for the pre-termination discussions to be excluded from later legal proceedings, there should be no “improper behaviour” from either employer or employee. Examples of improper behaviour are:

  • discrimination
  • threats of physical assault
  • undue pressure
  • harassment, bullying or intimidation.

Undue pressure is the most likely of the above examples to occur. It is undue pressure if your employer says that if the offer is not accepted then your employment will be terminated.

Undue pressure also includes not giving the employee enough time to consider and take advice on a formal written offer. As a general rule, notice for a pre-termination agreement should be no less than 10 days.

If you experience any of the above treatment during discussions with your employer you should keep a note of what happens as this could be used later in a claim against your employer.

If a settlement agreement is reached you should ensure that it’s laid out in writing. It’s not enough to just have the terms of your severance verbally negotiated. One of the legal requirements of settlement agreements is that you get independent legal advice on the terms. So you need to show your legal adviser the written terms.

By signing a settlement agreement, you will be unable to bring any legal claims against your employer, which are listed in the settlement agreement. This is why it is so important to get proper legal advice on settlement agreements.

If you need assistance with pre-termination negotiations or advice on a settlement agreement, Slater and Gordon Lawyers can help. Call us for assistance with negotiating the termination of your employment on 0330 041 5869 or contact us online and we'll call you.

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