Introduction to this document

Settlement agreement meeting proposal letter

Where you wish to propose a settlement agreement to an employee to terminate their employment on agreed terms, ideally start this with a meeting, but don’t spring this on the employee. Our letter arranges an initial meeting to discuss your proposal and can be used for either “without prejudice” meetings or those arranged under s.111A Employment Rights Act 1996.

Negotiated terminations

Sometimes, it may be necessary to terminate an employee’s employment in circumstances where you want to prevent them from issuing employment tribunal or other court proceedings against you in relation to the infringement of their statutory (or contractual) employment rights. Where there’s a pre-existing employment dispute with the employee, you would normally hold a “without prejudice” meeting to offer them a termination package in return for their signing our Settlement Agreement to settle that dispute. The without prejudice meeting should only take place with the employee’s consent and they should be given advance warning that you wish to have a meeting of this nature. In addition, all correspondence related to the negotiation of the settlement agreement should be clearly marked “without prejudice” to avoid disclosure of the content of it should negotiations break down prior to signature of the agreement.

Employment Rights Act 1996

Alternatively, where there’s no pre-existing employment dispute with the employee, s.111A Employment Rights Act 1996 provides that any offer made or discussions held by an employer with a view to terminating an employee’s employment on agreed terms is inadmissible as evidence in any subsequent ordinary unfair dismissal claim. However, there are some exceptions to this inadmissibility rule and it also doesn’t apply to automatically unfair dismissal claims nor to other types of claim, which means that, in practice, conducting “open” pre-termination discussions under s.111A is not without significant risk.

Acas Code of Practice

The statutory Acas Code of Practice on Settlement Agreements which are made under s.111A states that settlement agreements can be proposed by both employers and employees at any stage of the employment relationship. How the proposal is made can vary, but the Code says you may find it helpful to discuss your proposal in a face-to-face meeting which takes place at an agreed time and place. In addition, whilst not a legal requirement, the Code recommends you allow the employee to be accompanied at the meeting by a work colleague or trade union official/representative. Finally, it says it may be helpful if any reasons for your proposal are given when you make it. If you do give reasons, do this in a neutral and factually accurate manner and don’t make any misrepresentations.

Proposal letter

Our Settlement Agreement Meeting Proposal Letter can be used for either a without prejudice or s.111A meeting as we’ve given optional phrases and sentences you can use for each. It invites the employee to attend a meeting to discuss the termination of their employment under the agreed terms of a settlement agreement. We recommend you give the employee a couple of days’ notice of the meeting. Our letter also optionally offers the employee the right to be accompanied, explains the meaning of without prejudice or, alternatively, the broad implications of s.111A and advises them to treat the letter as strictly private and confidential. Finally, it confirms that it doesn’t constitute notice to terminate their employment. It’s then entirely the employee’s choice whether they want to take up your offer of discussing a settlement agreement - you can’t put any pressure on them to do so as settlement agreements are voluntary.