By Daniel Hunter

As the Government’s consultation on ending the employment relationship draws to a close, the Chartered Institute of Personnel and Development (CIPD) has voiced reservations about proposals to introduce ‘settlement agreements’, designed to make it easier for employers to dismiss under performing employees without fear of employment tribunals.

“There is a real danger that a measure intended to make things easier for employers could cause unnecessary arguments about what does and does not constitute a fair and legal approach to broaching the topic of poor performance with a member of staff," Mike Emmott, employee relations adviser at the CIPD, commented.

"There are existing, well-used routes to managing poor performance, and effort would be better spent ensuring more employers understand and are able to make use of them. The reality is that many employers already make use of compromise agreements as a basis for terminating employment - and those that need more confidence to do so will be no more empowered by settlement agreements.

“If the Government wishes to proceed with its proposals for settlement agreements, it should take clear steps to protect and promote good practice by requiring employers to have used proper performance management practices before offering a settlement agreement. In addition, we would propose instead of introducing a separate code on settlement agreements, to amend the Acas Code and guidance on disciplinary procedures to focus more clearly on promoting good practice in performance management.

"The consultation paper appears to rule this out. If settlement agreements become an excuse for not following basic good management practice — such as identifying performance issues and giving employees an opportunity to address them before moving to terminate their employment —employee engagement could well be undermined, to the detriment of productivity and competitiveness.”

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