Settlement Discussions

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What effect do settlement negotiations have on the ongoing employment relationship?

A recent case involving Leeds United Football Club highlights the importance of treating possible settlement discussions separately from the ongoing employment relationship. It’s a trap employers often dance dangerously close to.

In the Leeds United case the assistant manager declined a promotion and entered into settlement discussions about agreeing termination to his employment. Whilst this process was underway he was given alternative and less responsible duties and resigned in response.

The High Court found that the Claimant’s willingness to negotiate a termination package did not preclude him from claiming constructive dismissal.

This case re-enforces advice we often give to clients about settlement negotiations. Essentially, the parties should treat ‘without prejudice’ discussions about settlement as both invisible and entirely separate from the ongoing employment relationship.

The employer, in particular, should behave as if settlement negotiations were not taking place right up until the ink on the Settlement Agreement is dry!

So the answer to the question posed above is: ‘none!’