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Termination of Employment and Settlement Agreements
An employee with sufficient (subject to some exceptions) continuous employment has the right not to be unfairly dismissed, which means they can only be dismissed for one of a number of specific fair reasons and the dismissal must be fair in the circumstances.
Some dismissals are also classed as being “automatically unfair”. For some, but not all of these reasons, the employee does not need the minimum period of employment mentioned above.
The disruption to a business along with the potential awards for unfair dismissal can be considerable.
To avoid the risk of an employee pursuing a claim of unfair dismissal following the termination of their employment, you may prefer to agree settlement terms with them instead.
Once terms are agreed, it is important to set these out in a formal Settlement Agreement. This is the only method by which an employee can validly give up their statutory employment rights. A Settlement Agreement is a written document that contains specific terms and the employee must take legal advice on the terms and effect of the proposed agreement. Normally, therefore, the employer also agrees to pay a contribution towards the employee’s legal costs for this advice.
We can advise you on how to minimise the risk of a claim of unfair dismissal and, where appropriate, prepare valid Settlement Agreements setting out agreed terms.