CIPD responds to Government announcement on ‘Settlement Agreements’

The government’s proposal on ‘Settlement Agreements’ merits careful consideration, and is a definite improvement on the blunt weapon of compensated no-fault dismissal proposed by Adrian Beecroft, according to the Chartered Institute of Personnel and Development (CIPD).

However, as the government publishes further details of what they are proposing and how it will work in practice, the CIPD says it is imperative that it is made clear that settlement agreements should be used to encourage better and more consistent performance management by employers, not as a substitute for it.

Mike Emmott, Employee Relations Adviser at the CIPD, said: “The principle that employers should be able to manage the performance of their employees effectively, without fearing expensive and time consuming tribunals, is a good one. The reality that employment relationships sometimes don’t work out, and that compromise agreements can be used as a quick, face-saving way out for employees and employers is also recognised.

“However, an employer’s first point of call shouldn’t be to stick a compromise agreement on the table and show staff the door if an employee’s ‘face doesn’t fit’. This can only have a corrosive effect on employee engagement at an individual firm level, and job security and its hand-in-hand relationship with consumer confidence at a macroeconomic level.

"Perhaps most importantly, there is a law of basic common decency that says employers shouldn’t show employees the door for no good reason – undermining this risks undermining mutual trust and confidence in the workplace with catastrophic consequences for organisational performance and competitiveness.”