There is no two ways about it, running a successful business is hard. It takes a lot of effort, guile, persistence and emotional energy. Dealing with matters such as cash flow, suppliers, invoicing, production, customers, insurance and marketing would be ample work on its own; but on top of all that is arguably one of the trickiest areas to get right, managing staff.
In the context of the above, many busy owners don’t have the time or energy to follow weeks or months of procedure and process before being able to fairly part ways with an employee. As a result, a question is often asked, “can I just pay them off?”
The legal mechanism for this is entering into what’s called a settlement agreement (until recently it used to be called a compromise agreement). At its most basic; this is a deal whereby the employer gives the employee some money and in return, the employee agrees to part ways amicably and not bring any claims against the employer later down the line. There are requirements for this type of agreement to be effective including the employee taking their own legal advice, but a settlement agreement can prove a very effective tool in an amicable parting of ways without the turmoil and management time which can accompany sometimes long and drawn out employment law procedures.
The above said they are by no means a magic pill. Consideration has to be given to what it looks like to other staff if the company is willing to pay out money to move people on. It can also be expensive depending on the amount agreed and an approach to an employee to leave the company in this way can also backfire if a properly thought our strategic approach isn’t considered.
At Howarths we’ve advised on many of these types of scenarios over the years on behalf of our clients. The next time you are faced with a difficult member of your team and you’re not sure what your options are, take advice from someone who knows. Its pay off in the long term and has the potential to save you a lot of wasted time and money.
Gavin Howarth, Managing Director and Employment Law Advisor