How to part company with an employee who just doesn’t fit

Following a recent networking seminar one of the attendees called me to see if there is a way of, in their words, ‘getting rid’ of a difficult employee.

We talked through the legally recognised ‘fair reasons for dismissal’ but his role wasn’t redundant; although he isn’t a great performer it would be difficult to follow a poor performance process and that would take months; his conduct, whilst negative, wasn’t gross misconduct; and his absence record is poor but not poor enough to safely dismiss. Also there wasn’t the scope to consider using the little known ‘some other substantial reason’.

So we discussed having a Protected Conversation with the individual. This is where the employer describes what they are unhappy with to the employee, how they intend to manage it, and then offer them a sum of money to leave via a Settlement Agreement as an alternative to being managed in that way.

The company followed this approach, the employee accepted the offer and will leave the business less than 3 weeks after our initial conversation. If he had declined then, although it would have made things a little more awkward in work, there was no risk of being taken to an Employment Tribunal as the conversation was ‘Protected’ even though under normal circumstances offering an employee a sum of money to leave would clearly be classed as potential unfair or constructive dismissal.

Having a Protected Conversation is perfectly legal and was introduced in the Employment Rights Act, please see Section 111A if you would like more detail.

We find that most SMEs are unaware of the existence of Protected Conversations, although they are quite familiar with the concept of Without Prejudice.

A Protected Conversation is very similar to, and is actually a form of, Without Prejudice conversation in that the parties agree that whatever is said in the meeting cannot be quoted or even referred to in any future legal proceedings. Clearly that is crucial bearing in mind the above comment about such a conversation being potential constructive or unfair dismissal.

Although the 2 types of conversation follow a very similar format, there is a crucial difference between them in that, for a Without Prejudice conversation to be binding, there must already be a dispute between the 2 parties that the Without Prejudice conversation aims to provide a solution to whereas with a Protected Conversation the employer can raise issues with the employee and offer a Settlement in the same meeting without there already being a dispute between them.

If there is an existing dispute between the 2 parties and the employer wishes to make an offer of Settlement then it is normally better to do this via a Without Prejudice conversation rather than a Protected Conversation. The reasons are quite technical so I won’t bore you with them here but if you would like more details please contact us.

Moving on to the detail of a Protected Conversation, whereas in most formal meetings between employee and employer the individual is entitled to have a Representative present this is not the case for a Protected Conversation although there are some legal requirements about what must be explained in the meeting, confirming details in writing and giving the individual up to ten calendar days to consider any offer before accepting or declining it.

During this ten day period we normally recommend you offer the individual paid Garden Leave, although they do not need to agree and you cannot insist on it unless you can show a risk to the business if they remain onsite.

With regards to the content of the conversation it is also important to remember that agreeing to hold a Protected Conversation with an individual doesn’t mean you can just say anything you wish because they can’t quote it against you! The main point to note is that the legislation protects the employer against Unfair Dismissal claims but not Discrimination.

So if the issue is, or may be, linked to sex, race, religion, disability, sexual orientation or any other ‘Protected Characteristic’ anything you say may be written down and used against you! The same applies for breach of contract and anything that may lead to an ‘automatically unfair’ dismissal claim.

Ideally the meeting would be held face to face but clearly if an individual is furloughed or working from home this creates a challenge in terms of how to hold the meeting but it is still possible.

If agreement can be reached, the next step would be for the employer’s HR department or solicitor to put together a Settlement Agreement document, a legally binding contract where the individual signs to accept the agreed sum of money to leave the business on a specified date and in return waves their right to make a claim at Tribunal or court against the employer for Unfair Dismissal, discrimination (although the Protected Conversation doesn’t shield you from discrimination claims the resulting Settlement Agreement, once signed, does) or anything else they were aware of at the time of signing, with a few small exceptions that are rarely a problem.

With regards to fees for such advice, in the above example it came to half a day of HR consultancy at £300 plus vat for the initial discussions, putting together a script for the employer to follow in the meeting, plus advice on follow up discussions. In addition, we put together the legally binding Settlement Agreement document for a further £250 plus vat and emailed it to the employee’s solicitor.

Our Settlement Agreement documentation is fully legally compliant and we employ a specialist employment law solicitor to update it each year at the same time as they update our contracts of employment.

The only other cost, apart from the Settlement itself, is that the employer is required to pay for the employee to receive legal advice from a qualified solicitor regarding wording of the Agreement. For this we normally recommend that you specify between £250 and £350 maximum fee and ask the employee to ensure that the solicitor agrees this upfront.

We have drawn up over 100 Settlement Agreements over the years and can count on one hand the number of solicitors who have not agreed to that level of maximum cost. However, where costs have not been agreed upfront it is not unusual for the employer to be presented with an invoice in excess of £500.

186hr can create a Settlement Agreement Document specific to your company’s needs and offer advice on how to conduct a Protected Conversation meeting. Contact us for details.

An important point regarding paying the employee’s legal fees is that the employer only needs to pay for advice on the terms of the Settlement Agreement contract itself. If the employee wishes to take advice regarding the merits of the Settlement or whether they have a good Tribunal case against the employer they are perfectly entitled to do so but they will need to pay for that themselves, the employer is not responsible for paying for advice as to whether or not the employee can sue them!

The Settlement

With regards to what level of Settlement to offer in a Protected Conversation there is no formula, it is a case of judging how much will be attractive enough for the individual to accept whilst keeping a lid on costs and also not making it too attractive in case others find out what may be on offer and decide to try their luck in future!

Looking at the types of situation where you may wish to exit an employee via a Protected Conversation and Settlement Agreement, it is appropriate for most circumstances but we find that companies tend to use it when they want to agree a quick exit and do not wish to follow the more formal processes of redundancy, managing a poor performer, or a relatively new starter who passed their probation period but things are not working out as hoped. We’ll look at these examples in a little more detail.

Redundancy

Following a formal redundancy process is disruptive, time consuming and is something businesses generally wish to avoid. As HR consultants you won’t be surprised to read that we would always advocate following a full, fair and robust consultation process as opposed to using Protected Conversations to reduce staffing levels but we fully accept that there are circumstances where this is not what is best for the business. We have published a free guide on the 8 Steps to Making Redundancies that can help any company work through the redundancy process.

Employers sometimes prefer to have a Protected Conversation with the weakest or most disruptive member of staff who they feel would be most likely to be made redundant, especially when they would otherwise need to follow the rules on ‘pooling’, where all employees doing the same or similar roles need to be placed at risk of redundancy and a selection process followed over a period of several weeks to decide who will be made redundant.

Whereas avoiding redundancy consultation wasn’t really what the Protected Conversation legislation was designed for, it can suit all parties in that it is a way for the employer to reduce staffing quickly, without disrupting the team for several weeks and it does so in a cost-efficient manner especially when you take into account the time needed to manage the redundancy process.

As far as the employee is concerned, they are not put through all of the uncertainty of a redundancy process and are paid more money than if they were to be made redundant so often leave the company on significantly better terms than following a long drawn out redundancy process.

The ‘carrot’ normally offered by the employer to encourage the employee to accept the Settlement is a slightly enhanced redundancy payment and also often they agree to pay the employee in lieu for all of their notice period rather than the employee having to work some or all of their notice, which would normally be the case if they were made redundant.

Poor Performer

One of the most frustrating aspects of being a HR professional is that, even though it is an important part of their role, a great many managers seem to avoid managing poor performers proactively and often allow the poor performance to continue for several months before becoming exasperated and then telling HR that the individual “must be sacked as soon as possible” and become frustrated with HR when they correctly make the point that the manager should have managed it better!

Managing poor performers is actually quite straightforward if a structured process is followed. It does not need to become personal or adversarial if the manager sticks to the facts and acts reasonably. 186hr has developed a process to help managers do this in a way that is very effective and has been proven to be fair in an Employment Tribunal. Please contact us for more details.

We also run a half day training course (remember them?) for managers when these are allowed again that enables them to manage poor performers proactively and to a high standard, following the proven process we have devised.

It is hugely motivating for a team to see a poorly performing colleague, or one with a bad attitude, managed proactively and either improving or being managed out. As the old saying goes, ‘if you can’t change the people, change the people!’.

Conversely, paying off the poor performer has the opposite effect on morale and also employees’ perception of management as they tend to view this as rewarding bad behaviour.

Sorry about the rant, I will get off my soapbox now and step back into the real world. The advantages for the employer of having a Protected Conversation and offering a Settlement to poorly performing employees are many and obvious with the main ones being speed and cost savings as they will not need to pay the individual during the 3-6 month performance management process.

The advantages to the employee are not having to go through an uncomfortable process, they leave with a sum of money to tide them over until they start their next role, and also they will receive a good employment reference.

Finally, before holding Protected Conversations with poor performers you should consider the reason for their poor performance. The 3 main reasons employees perform poorly are lack of skill, lack of knowledge or a poor attitude. The first two are training issues rather than a reason to dismiss. Clearly though, if the reason for poor performance is attitude then only the individual themselves can change this and if they are not willing to do so it is often better to part company.

Short service employee who is not suitable

We have all witnessed it, the employee with a great attitude for the first few months but then it drops off a cliff and so does performance and / or attendance once they have passed their probationary period and been made permanent.

If this happens then the normal policies should be followed regarding conduct, absence, performance etc. to try and get the employee back on track.

This may involve the disciplinary procedure which can, of course, be time consuming and delay the inevitable dismissal. However, for this specific reason, when putting together such policies and procedures for employers, at 186hr we often include a ‘short service’ section where there is a shorter process that employers can follow e.g. the disciplinary process is reduced to a written warning and then dismissal rather than the usual 4 stage process of verbal warning, written warning, final written warning and then dismissal. This is legal and in line with ACAS and CIPD guidance.

If you do not have a short service disciplinary process or there is a good reason not to follow the normal company processes then a Protected Conversation may be appropriate. Again though, this option should be used sparingly so as not to be seen to reward poor behaviour or encourage people who wish to leave anyway to act in such a way that they try and engineer a Protected Conversation and a payoff themselves.

There are several other circumstances in which a Protected Conversation may be appropriate. Please contact us to discuss further.

At 186hr we have extensive experience of advising on and managing all aspects of HR, with a particular specialism in Employee Relations issues, diversity and employment law. Call us today to discuss your needs or talk through your specific requirements.