UK Employers need to avoid post-exit bad-mouthing, spurious reasons for leaving, and poor handovers.
There are a number of practical issues which employers need to consider when planning and implementing an executive’s removal from an organisation. The employer may wish to proceed with a negotiated severance arrangement where there are no good grounds to make a fair dismissal on grounds of redundancy, misconduct or for some other reason. It may also be helpful to an employer to have the other protections which a settlement agreement can provide (for example, waiving the employee’s right to make specific tribunal claims).
In these circumstances, there will be considerable focus on commercial and legal issues. Detailed drafting aspects of the settlement agreement can include the amount of money in the severance package that will be acceptable to both parties, whether the employee should spend time on ‘garden leave’ before the contract is terminated, which benefits will continue, how restrictive covenants in the contract will be preserved post termination, and how appropriate confidentiality and ‘bad mouthing’ provisions will be framed.
However, such departures can bring about a seismic change for either the organisation as a whole, or the particular department in which the employee works, depending on the seniority and role of the departing individual, and the best laid plans may go awry if the employer has not taken into account the practicalities and ramifications involved.
For example, it is often the case that the employer will not wish to terminate the executive’s employment immediately and would prefer to negotiate an agreed exit. This not only allows for a more managed departure - in terms of communications, farewells and handover of responsibilities - but also avoids positions becoming entrenched and legal proceedings more likely if the employee is removed immediately and without warning.
To achieve an exit on agreed terms, time needs to be set aside to allow for the negotiation of the severance package. During this negotiation it may not be sensible, from either the employer’s or the employee’s perspective, for the individual to be in work. It may, therefore, be appropriate to agree that the individual takes a period of paid leave, if this is possible in the circumstances.
From the employer’s perspective, this period of absence should not to be too long otherwise the employee may try to use the negotiation to extend employment. And it is in the interests of both parties to avoid an extended absence without explanation as this increases the risk of rumours or leaks prejudicing the management of the process.
Both employer and employee need to be ready to explain the individual’s absence credibly, to colleagues and potentially contacts outside the organisation, in the period prior to the conclusion of a severance deal and being able to make an agreed announcement. Failing to do so may have unintended consequences. If the employee suddenly disappears unexpectedly and without explanation, speculation may run rife – for example, that the individual has been suspended or dismissed for some act of gross misconduct, or has suddenly been diagnosed with a life-threatening illness. Managing the explanation for the individual’s absence can avoid unnecessary disruption to the negotiation process.
Likewise, employers need to consider carefully the timing of an executive’s departure and the commencement of negotiations. Once a termination negotiation begins, there is an inevitable risk that the employee will become less cooperative with regard to ongoing responsibilities and, in any event, it may simply not be appropriate or desirable from a business perspective for the employee to continue to fulfil his or her obligations. Employers need to think through, and communicate carefully, how the employee’s responsibilities are to be moved over to colleagues or a new appointee, in order to avoid difficulties and embarrassment.
Finally, internal and external communications could prove to be a flash point if mishandled and employers may need to craft these carefully. Organisations may end up using the hackneyed clichés of “leaving to pursue other opportunities”, “spend more time with the family” or “take a break to recharge batteries” for lack of any more imaginative or genuine reason for the individual’s departure, but the parties should consider whether the position can be presented more positively.
This article was first published by CIPD in September 2015.
