Viewing 37 posts - 1 through 37 (of 37 total)
  • any HR types in? compromise agreements vs performance management
  • sofaboy73
    Free Member

    after 3 years of working in a business development role for a large corporate, it has become apparent to both me and my employer that it isn’t working for one reason or another.

    as a result i’ve been given a choice by the company that i can either go down a 3 month performance management route (targets set, if not met a number of options – extend period of performance management, written warnings or dismissal – with dismissal being the most likely, followed by 3 month notice period) or to take a compromise agreement.

    I’m waiting for them to come back to me with the offer for the comp agreement and targets for the performance management, however if it is a decent offer i’m thinking about the comp agreement as i have no real desire to stay with my current employer. But don’t really know a great deal about them and concerned about the impact it might have on future employment.

    are there things i should be looking out for?
    apparently you can get a reference attached to the agreement – what does this involve?
    what constraints will a comp agreement put on me – am i able to mention to future employers that i took a comp agreement to explain why i would be immediately available?
    From a future employer / recruitment perspective how are comp agreements viewed?
    is it likely to make it more difficult to get a new role or would i be better taking the performance management under the theory it’s easier to get a job when you’ve already got one?

    any input greatly appreciated

    nickjb
    Free Member

    Shouldn’t be an issue if you take the compromise agreement. Maybe 3 months pay. They might pay more to save some hassle, depends on lots of things. As you mentioned you can get a pre-written reference; that’ll just say you worked there during what period and in what role. You could get more in there if you like. No need to tell a future employer unless they ask you directly and even then you could be a bit vague. Current employer will only give any potential future employer what is in the reference letter you agreed. Either way start looking for a job now.

    bails
    Full Member

    Mrs B works in hr. In her experience, if they’re asked to put someone on performance management then that person will be gone, regardless of performance. The compromise agreement is a way of avoiding hassle and stress for both of you. If it were me, if take it.

    Good luck, whatever happens.

    fatgit
    Free Member

    Hi
    Tread very carefully and definitely get legal advice via Union if you’re in one or solicitor who specialises in employment law.
    I know someone who left their job with a compromise agreement and took legal advice. The solicitor said it was a funny term as the only one who compromises is the employee!
    As I understand it you are effectively being made redundant but without the post necessarily being made redundant if that makes sense.
    They will offer you a payment in exchange for your silence and you will be asked to sign away any right to sue for any reason eg unfair dismissal etc.
    That said if you want to leave anyway and the offer is good then why not go for it.
    It saves the company an awful lot of time and expense and liability by not having to go down the disciplinary route and is much easier for them.
    Can’t help with the rest of your questions I’m afraid.
    I am not a legal type or H R type so have limited experience of this- it’s just what I picked up in conversation.
    Hope it helps
    Steve

    jekkyl
    Full Member
    br
    Free Member

    In her experience, if they’re asked to put someone on performance management then that person will be gone, regardless of performance. The compromise agreement is a way of avoiding hassle and stress for both of you. If it were me, if take it.

    Mine too.

    In fact we recently did this with one of our employees.

    We offered them a paid-for appointment with a solicitor of their choice. They got out (which we both wanted), we ensured that we kept our costs to a minimum with little impact on management time and they got as much as if they’d taken us to a tribunal (and we’d lost).

    Easier all-round – make sure you get everything you’re entitled too but don’t take the pi55 as they may decide to ‘performance manage’ instead.

    rickmeister
    Full Member

    Sounds like the Compromise Agreement is the way to go but check the wording and renumeration details. It does save a load of hassle, the employer can work on getting a replacement unlike a redundancy where teh position has gone and cant be replaced so quickly.

    You basically agree to leave on better terms than a disciplinary or sacking. Shake hands, it hasnt worked and you boh know it.

    Agree that PM is a slippery slope to being managed out against targets you sound like your not going to hit.

    chakaping
    Free Member

    Not a HR person but was a union rep and helped with many compromise agreements.

    I’d definitely take it if I were in your position. Being performance managed out of your job will look much worse, and since you’ve said you don’t really want the job anyway…

    br
    Free Member

    From a future employer / recruitment perspective how are comp agreements viewed?

    A part of the agreement is no one else except you and your employer know.

    You just need to create a ‘story’ to explain it.

    theotherjonv
    Full Member

    Depends also on what terms the compromise agreement takes. They may just restrict it to not suing their arse off afterwards and to playing nicely, but I have seen CA’s that restrict the employee to not working for a competitor for a period of time, to not poaching staff, etc.

    The former is a tricky one – many people seem to think that this is restraint of trade and on its own it probably is – if you’ve worked in paperclip sales for 20 years then to not allow you to work in paperclip sales would be. However, according to a respected HR pro of my acquaintance; if they give you a reasonable sum of money in return for that restraint then it isn’t.

    The latter – can always be worked around; otherwise why would recruitment consultants exist 😉 Or you could place an ad in the desired candidate’s local paper and they mysteriously apply of their own free will……

    convert
    Full Member

    Do you want to work somewhere where they don’t want you anymore? I’d take it but don’t sell yourself short – a colleague of mine negotiated 12 months salary in her compromise agreement (she has been here for 6 years) in return for working up to a certain date they wanted her to stay until, for carrying out specific tasks before she leaves and her silence. She is the embittered type and a little too ‘entitled’ for her own good and the package was damned good considering the situation. The ‘silence’ bit looks like it might just trip her pay day up though – discussions afoot regarding if she has breached it – play the game if you go for it.

    sofaboy73
    Free Member

    all good points raised above and thanks for the input.

    i suppose my biggest concern is how not being employed / immediately available / my reasons for leaving would be viewed by a prospective employer.

    i was in recruitment for 10 years and alarm bells always rang if was interviewing candidates who had an unexplained departure on their cv

    sofaboy73
    Free Member

    i’m also in early stage discussions with a couple of other employers and concerned that is i spring that i’ve left my current place on them it might throw a spanner in the works.

    i’m going round in circles in my head basically!

    chakaping
    Free Member

    Are you going for another job as a business development manager?

    If not, I wouldn’t worry about admitting this role hasn’t worked out.

    rockhopperbike
    Full Member

    You need to watch the tax implications. if your current contract of employment has a TOIL clause, then a certain amount of the cash they give you is not tax free, – also its all taxable above around £30K- so watch out for that.
    get them to put you down as redundant on the “reference” much simpler in the long run.

    sofaboy73
    Free Member

    Are you going for another job as a business development manager?

    yes, in my current sector or something related – hence the concern. there are mitigating factors as to why it’s not worked out (lack of company resource & infrastructure etc), so not just me being shite at my job which i suppose provides some form narrative for future employers

    if your current contract of employment has a TOIL clause, then a certain amount of the cash they give you is not tax free

    whats a TOIL clause?

    thisisnotaspoon
    Free Member

    What others have said, the OH works in HR and compromise agreements are just what they say on the tin, a compromise between firing you and having to go the whole process and potentially a tribunal etc, and just giving you the money. Same as redundancy, but without having to justify it.

    convert
    Full Member

    Can you negotiate X months of paid gardening leave with a short notice period in lieu of a standard pay off. Bonus your side is it gives you X months of ’employment’ if you think it will help you get a new job; from their side you might get a job before the end of the negotiated period saving them cash.

    P-Jay
    Free Member

    Are there any redundancies on the cards?

    I don’t work in HR, but I faced a similar choice a few years ago.

    I was moved from a position I was doing very well in, to one I sucked at with no training or even time to adapt – after 3 months they offered me the same choice you have now. Spoke to the Union, they told me that even if I failed every single performance review I would be at least 6 months from start to dismissal, so if I had thick enough skin I could get 6 months money from them, or better still at least 6 months income whilst I looked for another job, rather than just 3, so I took the Performance Management offer, it was a paper exorcize as they simply gave me the same targets I was failing at anyway with not extra training and really turned the screws on my in an attempt to “manage me out” – 3 months later large scale redundancies we announced, management knew all about them before hand, they simply tried to save a big pile of money by managing out people before they had to pay them off.

    I walked with £15k.

    As for references, the only references I see these days are simple forms that confirm someone start date, end date and number of sick days.

    Twodogs
    Full Member

    I took one about 10 years ago, as it was obvious to me that the “performance review” process would result in my going anyway. It helped that they offered me the compromise after I’d applied for a 3 month career break (which everyone was entitled to after 5 years employment), as it made the decision much easier.
    I ended up taking a paid year out, which was fantastic. Next employer didn’t ask for specific circumstances of me leaving the job, I only had to declare that I hadn’t been fired (which I hadn’t). And the reference was good.

    sofaboy73
    Free Member

    thanks for all the input.

    as someone mentioned above, the performance management process would be 3 months followed by 3 months notice period. in that 6 months i would actually cost the company (gross salary, pension contributions, employers NI) roughly double what they are initially indicating they would offer as the comp agreement.so going to try an negotiate the comp agreement to what i would of taken home in that 6 months and then walk away.

    thanks for the sounding board

    phil56
    Full Member

    Sofaboy73 – a couple of things to think about (I have been on the employers side of this several times)

    Firstly you are entitled to legal advice paid for by the company – make sure you take it. A compromise agreement will spell out your entitlements under said agreement, but once you sign it you will forgo any and all claims against your employer. Check if they are offering to pay for your legal advice.

    Secondly the agreement should contain a confidentiality clause so no one else will know how or why you came to leave your employment, and technically you are being made redundant, which is what leads to the tax free element of any payment.

    The reference will usually be bare bones – the dates of your employment, your role and not much more, maybe attendance record – but that’s all most employers are providing these days anyway.

    The weeks after you’ve finalized the agreement are no different to being on garden leave – but you’re not dealing with the stress of ‘performance management’, which as I think you realise is simply a way of providing the legally required justification for dismissal without redress.

    Get a specialist employment laywer and then relax. If you are reconciled to parting company then a compromise agreement is the best option without doubt, and then you’ll have the cash and time to figure out what you want to do next.

    Hope that helps,

    ninfan
    Free Member

    Hmm, at the very least 6 months worth I reckon, there has to be something in it for you over and above what you would get anyway, I walked with 6 months compromise on a one months notice period, sou you should Defo be looking at moe than that as your opening gambit, 9 months maybe (worth remembering that a compromise agreement won’t have tax on it, so can be worth a bit extra)

    surroundedbyhills
    Free Member

    Your company should meet the legal cost of you having a lawyer check the agreement. Other wise just try and get as much as you can and have a written agreed reference done before you leave. Good Luck.

    Conespanner
    Full Member

    I left a company with a compromise agreement and it was the best thing I had ever done. 3 months salary, very good reference agreed up front and my employer also paid the legal costs. I think getting legal advise was mandatory with this type of agreement. Found alternative employment within ten days but took a six week holiday before starting my next challenge.

    brooess
    Free Member

    Not got any advice to offer OP except good luck. IME when these things happen there’s a lot of fault at the employer’s end – mis-recruited, bad management, impossible targets etc etc but it’s the employee who takes the hit in terms of having to find a new job and having to explain it to new potential employers – whilst those who made mistakes or were dishonest at the employer end just carry on as they were…

    That said, I was managed out a few years ago after a year in a job where, if I’d been told the truth before taking it, would’ve gone nowhere near the place… I have my position clear to anyone who wants to know why I was only there a year – along the lines of the role was not what I thought it was going to be and after a year of trying my absolute hardest to get it to work, I decided I wasn’t in a senior enough position to make the changes that I thought were required, accepted those changes were outside my sphere of influence and gave my notice. This is all true, which is important.

    I’ve just got a new job offer today for a new role and no-one even mentioned that short period – so you may find that you’ll be ok anyway.

    One lesson I learnt was that in interview, if my gut feel says this place/manager doesn’t feel right, then listen to my gut feel!

    good luck

    edlong
    Free Member

    compromise agreements vs performance management

    All other things being equal, in your situation, the CA is the least bad route. In fact, it’s likely the least bad route for all parties, but not necessarily, and there’s still some stuff you need to look out for.

    targets set, if not met a number of options – extend period of performance management, written warnings or dismissal – with dismissal being the most likely, followed by 3 month notice period

    How much, if any, of that is in writing, or otherwise proveable (to an evidentiary standard, i.e. to an employment tribunal)? If you can prove that they’ve given you unrealistic and / or unachievable targets as a pretext for dismissal, then you might be better riding the storm, getting the boot then going to ET for wrongful dismissal. In the absence of anything explicit, a dramatic and unjustifiable change might do it, e.g. if you are currently targeted to sell 100 widgets a month and your new target is 5,000 per week, or your targets are significantly more onerous than colleagues in similar roles.

    am i able to mention to future employers that i took a comp agreement to explain why i would be immediately available?

    Possibly not, some CAs will include in the confidentiality non-disclosure of the existence of the agreement itself. “Voluntary redundancy” should cover it, and is not far from the truth. Confidentiality (“gagging”) clauses should be mutual, so both parties are equally bound to keep schtum, one of many reasons why this

    get legal advice via Union if you’re in one or solicitor who specialises in employment law.

    is very good advice. Employers will usually pay a few hundred £s for your legal costs, which is all it should cost to get an employment lawyer (make sure they are a specialist, there’s plenty) to give the proposed CA the once over. If not, worth paying yourself IMO. It’s in the employer’s interest to pay though, as if they’ve paid for you to get professional advice you can’t then go back and claim you didn’t know the implications what you were signing after the event (which people have tried)

    From a future employer / recruitment perspective how are comp agreements viewed?

    Considerably more favourably than “dismissed for not being able to do the job to the required standard” I’d wager…

    They will offer you a payment in exchange for your silence and you will be asked to sign away any right to sue for any reason eg unfair dismissal etc.

    Partially right – there will be a gagging clause (which should apply to both sides) but you cannot sign away your employment rights – even if you sign a piece of paper saying this, it won’t be enforceable. Some employers rely on people not knowing this kind of thing and / or not taking professional advice, but if you’ve been discriminated against, wrongfully dismissed, not been paid minimum wage or whatever, you can still seek redress.

    You need to watch the tax implications. if your current contract of employment has a TOIL clause, then a certain amount of the cash they give you is not tax free, – also its all taxable above around £30K- so watch out for that.

    You will almost certainly be “made redundant” as far as the taxman is concerned. Pay in lieu of notice is, iirc, taxable, but “compensation for loss of office” isn’t. It’s in everyone’s interest to do it that way – the employer saves on national insurance and it won’t be pensionable either (you should factor pension contributions into your assessment / negotiations on the amount if you have a good pension scheme running, another reason a decent lawyer would be advisable).

    just try and get as much as you can

    At the end of the day, that ain’t bad advice. You’re leaving. You know it, they know it. It can be hard, or it can be easy, for both parties. They aren’t doing you a favour going down the CA route, it’s a lot, lot easier and less risky for them and they should split the difference on costs. You’ll know them better than me, but ime the employer won’t have come to you with their best offer. Ask for more, they can only say no and you’re still where you were.

    If you don’t play ball, you’ll have a minimum of six months pay from here – say three months to go through the process, then 3 months notice. In reality these things always slip, so that is an absolute minimum. For the employer, that’s full wage costs, so includes NI and pension contributions (which might or might not be significant), but that’s by no means the whole cost to them – “managing someone out” is a risky business (and risk has a £ value itself) so they will have to make sure they go absolutely by the book every step of the way and that can be quite onerous – documenting all the meetings, the performance figures, etc etc. and that all costs.

    If it’s a big company with professional HR people, they may not let it go to dismissal if there’s one thing wrong with one piece of paperwork at one stage of the process, if that opens the door for a potential claim. Your expectation of what getting rid of you easily is worth to them should start from there, not where their opening offer was.

    Good luck!

    sofaboy73
    Free Member

    Some great advice, thanks all

    Luckily contract negotiation is an integral part of my role which they trained all BDM’s extensively on. Time to use some of their investment against them I feel!

    patagonian
    Free Member

    I was a senior manager for a very large British company, trust me you are already on your way out of the door so take the compromise agreement.
    Ask for it to be described as voluntary redundancy so then you are entitled to job seekers allowance.
    Even if you left on good terms our company policy regarding a reference was to only confirm dates of employment etc so that shouldn’t be an issue nowadays.

    nickdavies
    Full Member

    I can tell you it’s not much fun. I’ve been through this on both sides recentley and also had the pleasure of the aftermath – I hope it’s not too personal for you.

    Take some legal advice on any settlement agreement (it’s not called a compromise agreement anymore) and make sure it’s a decent solicitor. This should be funded by your employer. These things can bite you in the ass later on. Remember the wording of it can affect your tax position have this clarified by a specialist if you want to use the tax free benefits. You also need to look at your contract for notice clauses regarding pay and also find out if there is a history of gardening leave in the company for the tax implications. If we’re talking mega money another way to get around the 30k and over tax bill is to look at pension contributions as part of it.

    Also note restrictive covenants are not nice things so you need to make sure if any of these are in there that they are a. Not going to prevent you from earning a living and b. That you are being compensated adequately for their inclusion.

    My emails in my profile drop me a line if you like. Not a lawyer but have researched this pretty extensively this year.

    ourmaninthenorth
    Full Member

    Compromise agreement with money and reference. Focus on the right deal for you.

    Performance management never works. Just about to take someone firm this route because they don’t want the CA. Will harm everyone over the next three months.

    Take the money and run!

    konabunny
    Free Member

    There’s a lot of well-intentioned nonsense being talked in this thread alongside useful advice.

    You are not being made redundant in any sense.

    You don’t get many references any more but maybe you can negotiate one. Confirmations of employment are more common. You should have a non-disparagement clause in there – it works both ways.

    I don’t know where the suggestion that your employer has an obligation to pay your legal costs comes from but maybe I’m out of touch.

    Junkyard
    Free Member

    iirc they have to when they make you redundant but you are entitled to one meeting only at their expense – you may have to choose from a list been a while since i had to advise on this so not certain.

    nickdavies
    Full Member

    I don’t know where the suggestion that your employer has an obligation to pay your legal costs comes from

    It’s because a settlement agreement is only valid if the employee has had legal advice on it, and to ensure this happens the employer is supposed to pay for it. It’s not a blank cheque though, and it’s not legally required but because the employer opens themselves up to problems in a tribunal situation if the employee hasn’t had legal advice the responsibility becomes the employers to cover those reasonable costs. Once you get over and above the basic costs, if you start negotiating up etc via a solicitor and costs rise then the employer wouldn’t be obliged to bear that cost.

    It’s because settlement agreements are used in the wrong circumstances often and they can be weighted unreasonably towards the employer in a lot of cases. A lot of employees would probably cut that corner if it was out of their own pocket, and this prevents that. These agreements are notoriously bad for being drafted and agreed by people who don’t know what they are doing.

    Xylene
    Free Member

    This is all very different to the education sector.

    These non-disclosure clauses would be interesting to see how they are enforced. I’ve known many teachers to have had heads call up and tell a school that was interested in them why they didn’t want to take them.

    konabunny
    Free Member

    it’s not legally required

    Yes, exactly.

    andyrm
    Free Member

    As someone who’s used performance management plans on sales staff, I can tell you 100%, that as soon as you are on one, there’s a huge target on your back.

    A performance management plan, especially in sales, is pretty much a death warrant. Objectives, targets and timescales are all set, you sign and agree to them, so therefore if you miss on anything covered in the plan, you have failed in your part of the agreement and so are right in the cross hairs.

    Take the CA, get out sharp. Build your back story about getting out due to the infrastructure not being there to support your business development efforts, and remember that in any sales/business development role, it’s pretty much a given that as soon as you hand in your notice, you’re on gardening leave, so no recruiter will be surprised you’re available immediately.

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