What are the key legal points regarding the termination of employment?
If a contract of employment is terminated by mutual consent, is an employee still entitled to claim unfair dismissal?
Can an employee claim unfair dismissal on expiry of his or her fixed-term contract of employment?
How much notice is a resigning employee required to give his or her employer?
Can an employee retract his or her resignation?
What options does an employer have where an employee who has resigned begins to underperform during his or her notice period?
Can an employee claim unfair dismissal if he or she has resigned?
Where an employee resigns, can the employer pay the employee in lieu of his or her notice period?
Are there any possible repercussions for an employer that persuades an employee who has resigned and accepted an offer with another employer to stay?
How can an employer prevent a possible discussion about a compromise agreement resulting in a claim for constructive dismissal?
An employer might wish to enter into a compromise agreement with an employee when there is a dispute between them that could lead to dismissal or resignation. Under a compromise agreement, the employee agrees not to bring legal action against the employer over the dispute, usually in return for monetary compensation.
A suggestion by an employer that an employee resigns (or that his or her employment is terminated by mutual agreement) and enters into a compromise agreement has been found to amount potentially to a breach of the implied term of mutual trust and confidence, allowing the employee to resign and claim constructive unfair dismissal (Billington v Michael Hunter & Sons Ltd EAT/0578/03). To prevent this, employers wishing to propose a compromise agreement should present it as one of a range of options open to the employee to move the situation forward amicably and to the satisfaction of both parties. The employer should not exert any pressure on the employee to accept this option.
Discussing a compromise agreement is not a substitute for following a disciplinary or grievance procedure. If the employer suggests a termination of the employment on terms favourable to the employee, without any attempt to address the issue by following a fair disciplinary or grievance procedure, this could be a factor leading to a finding of constructive dismissal.
Employers can state that communications, both written and verbal, with an employee regarding a compromise agreement are on a "without prejudice" basis. In theory this means that the fact of the meeting, or written communications, and what is discussed should not be admissible in the event of court proceedings, and therefore could not be used as the basis for a constructive dismissal claim. This will apply only where the discussion is a genuine attempt to resolve a dispute that already exists between the employer and employee. There is a risk that, should the matter result in court proceedings, the court will find the discussion was not genuinely without prejudice. For this reason, although a compromise agreement should be discussed only on a without prejudice basis, the employer should not rely on the discussion being without prejudice, and should ensure that its actions are fair and not in breach of the duty of mutual trust and confidence.
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