When can I offer a compromise agreement?
The timing of the offer of a compromise agreement is important, as employers need to be careful to comply with the law whilst positioning any offer in accordance with a planned negotiating strategy. Timing can be crucial which is why London Compromise Agreements have included this section, so you can understand the issues.
Employers are often keen to offer a compromise agreement during the initial stages - sometimes even before the beginning of the capability/ disciplinary or redundancy procedure.
An early offer of a compromise agreement has the advantage of saving time. The employee will have the certainty of a financial payout and if they are happy about a mutual decision to terminate this can improve employee morale. In short, both parties have the benefit of certainty at an early stage.
However, there is case law to suggest that such action may be tantamount to constructive dismissal, allowing the employee to argue for unfair dismissal compensation. This could mean that the compromise agreement offered would have to be greatly increased so as to avoid the matter being resolved by the employment tribunal.
The more dependable route is to seek legal guidance, to help you manage the employee through the procedure and, only at the correct time, offer a compromise agreement. There are strategic considerations in relation to timing - if a compromise agreement is offered immediately then your employee may think your legal position is weak and that in time there will be a larger offer.
A compromise agreement should be offered at the time when the employee is most likely to accept but not at a time which would open you up to having to increase the package offered.
For more detailed advice tailored to your needs please call Andre Pungerl or Ruth Neil both specialist employment partners at Stone Joseph on 0207 8549098.