11th June 2021

How to exit a problem employee on the basis of performance

As CIA Director, Ezra Kramer stated, in the Bourne Ultimatum, “My number one rule is hope for the best, plan for the worst”. This is good advice for any HR professional trying to exit a problem employee. Make a plan A and fall back on a Plan B.

Remember that the words “without prejudice” will only apply if there is an existing dispute between the parties. If there is no “existing dispute” between the parties, then the employee can rely on your emails, documents and even any conversations which take place, regardless of whether the words “without prejudice” are used or not.

When these is no existing dispute, an employer may have to fall back on having a “protected conversation” with the employee. This process is governed by the ACAS Code of Practice on Settlement Agreements.

I would advise that, in order to comply with this process, an HR professional takes the following steps:
STEP ONE: The employer should approach the employee to explain the concerns about the employee’s performance. It is important that the employer lists some of the issues.

STEP TWO: The employer can then tell the employee that there are two options open to the parties. The first is a performance improvement plan. The second is an exploration of whether the parties can agree to an exit on the basis of a settlement package.

STEP THREE: If the employee agrees to option two, the employer puts forward formal written terms. I would recommend that the employer goes to the expense of drafting the settlement agreement, rather than giving the employee a summary of the basic terms. By doing that, this proves to the employee that the employer has gone to the expense of drafting an agreement, meaning that the employer means business.

STEP FOUR: The employee must have a reasonable period within which to consider the formal written terms. The ACAS Code suggests ten days. The employee must also receive independent legal advice on the implications of the settlement agreement.

STEP FIVE: If the employee is not interested in exploring settlement, the employer should back off immediately and start the proposed performance improvement plan. Remember that, provided that there is no “improper behaviour”, then any emails, draft agreements, documents or conversations cannot be referred to, in support of a future employment tribunal claim for unfair dismissal.

As I have said, the number one rule is agreeing an exit strategy is hope for the best. And plan for the worst.
And, additionally, don’t say anything during such discussions that you would not want to re-state at a public hearing!

If you want specialist advice about how to manage an employee out the business, please contact the Blackadders’ Employment Team, working in Perth, Dundee, Aberdeen, Edinburgh and Glasgow.

Simon Allison, Partner
Employment Law

Winner of the ‘Lawyer of the Year Award’ at the 2018 Scottish Legal Awards
Blackadders LLP


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