Can you really end employment quickly?
The recent action of P&O, in dismissing hundreds of employees without notice or following any means of consultation, has hit the headlines and caused much bewilderment including at government level.
Is this action unlawful and if so, is there a safe and legal way of ending employment this quickly?
The recent P&O situation is perhaps not the best example of how an employer should dismiss an employee. What can be understood from the information available is that there were no grounds for dismissal due to conduct or performance or any of the other matters which an employer can use to justify a termination.
It is understood that in fact none of the employment positions was actually redundant, as the employees were immediately replaced by agency workers. So, did P&O think they would be able to terminate without risk of multiple claims for unfair dismissal?
In order to end an individual’s employment with minimal risk of an employment tribunal the employer should follow a specific process. This requires the employer to show that there was a genuine, fair and non-discriminatory reason for the dismissal and that the decision to terminate was reasonable in all the circumstances.
Accordingly, steps must be taken and records retained to ensure and prove if necessary at a tribunal, that the employer was acting appropriately.
If the employer wishes to expedite the decision to bring the employment to an end with no process being followed when there is a true redundancy this can sometimes be achieved by ‘voluntary redundancy’. However, where there is no actual redundancy, the only way to do this is to use a settlement agreement. Taking this route will invariably contain some incentive to the employee, for example an enhanced ex gratia payment over and above the employee’s normal statutory entitlements. In return the employee agrees to waive all rights to make a claim. The agreement can also cover other matters such as confidentiality and post-termination restrictions, ultimately providing certainty to both parties.
In the case of P&O the employees’ comments in the media saying they were unable to comment for fear of losing out on payments, imply that a settlement agreement with both incentive and confidentiality clauses included was on offer.
The risk for any employer taking this approach is that there is no guarantee that the employee will accept the offer. This risk is intensified if the employer has already acted unlawfully, for example by making a premature dismissal. This is because the employee’s potential entitlement to compensation if a claim is brought, will increase.
It is worth noting that for any agreement to be effective and enforceable, the employee must obtain independent legal advice on the terms before it is signed. The adviser will normally explain to the employee the nature and possible value of any potential claim the employee may have, so that the employee clearly understand what rights are being given up in exchange for the incentive being offered.
This in itself poses a risk for the employer who has acted in a tactical way without having first had a proper discussion with the employee. There is never an obligation to accept the terms proposed and the employee may, after having had the advice, decide to make a claim instead.
The terms of the agreement should also ensure that all aspects of the offer are fully described and all claims excluded. It is therefore essential to use an up to date, professionally drafted, settlement agreement for this purpose.
In conclusion, properly formulated and correctly signed off ‘voluntary redundancy’ settlement agreements can be a useful and secure option for an employer looking for a quick and clean break. However no matter which route an employer decides to take what is always advisable is that they always get the right advice.
Termination of employment can involve difficult financial, practical and commercial considerations, 121 HR Solutions(email@example.com) can help in determining the best options, risks and where appropriate provide and help negotiate settlement agreements.