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Settlement Agreement

Apologies but I have been asked and although I know the answer I just wanted to bounce this.

We have a member of staff who raised a grievance via our MD against her department head last year while I was on holiday (there is just me).  While I was away they arranged an informal meeting between the member of staff and the department head, there was no-one facilitating.  When I came back I asked for a copy of the grievance and was concerned that bullying and harassment has been mentioned and was therefore not happy about this being a one to one however, I was assured it was all resolved and both parties were happy.

This year the department head has had capability issues with this member of staff and after a few informal chats and improvement plans in place, major mistakes are still being made.  Just over two weeks ago I was asked to instigate disciplinary proceedings but before I could do this the member of staff resigned.  When I spoke to her she said that it would be a done deal because her department head had it in for her, the grievance was never resolved and she has been bullied for the past two years.  She has said that when she leaves, she is currently furloughed, that she is going to seek legal advice.

Yesterday I received a request from her to see if we would extend her notice period and therefore keep her furloughed until mid May. My answer was no, however my MD has asked if we do extend her furlough, would we be able to arrange this via a settlement which states she would take no further action.  I have said not and would be red flagged by a solicitor in a minute. 

Please someone correct me if I am wrong.

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  • I think you are wrong and cannot understand your concern
  • Agree with Peter, the settlement agreement can (and should) contain a condition that no outstanding claims of any nature can be made, and is in full and final settlement of any disputes declared or undeclared between the parties - this is very often the case.
  • In reply to Peter Stanway:

    Thanks Peter. I understand that a settlement agreement is in full and final settlement of any future claims, my issue was can we use furlough as the agreed settlement which is about 6 weeks worth, that will be reclaimed from the government. If we offered this would this be flagged by a solicitor as surely furloughing is because there is no work, not necessarily used to keep someone on after they have resigned to get them more money, or have I got this wrong.
  • In reply to Sarah Jane Moore:

    Hi Sarah,

    So you mean her settlement offer - where employers would normally offer a tax free sum, the employee wishes to receive 6 weeks of furlough pay?
  • In reply to Sarah Jane Moore:

    Sarah Jane - if the person is on furlough, then the payments whilst furloughed are contractually due to her (assuming you contractually agree to extend her notice). To put a settlement agreement in place, she will need to seek legal advice, where she will hear that what is on offer is no more than her legal due - the probability is that she will come back asking for more - even thought he extended notice is "more". Also, if you have work for her, then furloughing would not be appropriate - and if discovered in audit could lead to some heavy fines

  • I think a solicitors advice could well depend on the strength of her claim, If she has no real claim then staying on books for another few weeks is probably a great deal for her and she will sign, if she has even a modicum of a claim then its a poor deal and by attempting to go down the settlement agreement route you are probably opening a can of worms.

    I think (for what its worth and its a personal opinion) this is an abuse of the scheme but that doesn't mean its not possible.
  • In reply to Keith:

    Thanks both Keith and Ray. In fact I have convinced them not to go down this route and treat them as separate entities purely based on lack of information. Any settlement agreement should be outside of any furlough arrangements as like you I believe it to be an abuse of the scheme and one word and the statement that you have also used 'HMRC' and 'can of worms' helped to steer them away from this.