Firms taking more care to avoid litigation


Two-thirds of employers get workers to sign compromise agreements when they leave to prevent them from taking the organisation to an employment tribunal at a later date.

According to a survey by specialist journal IRS Employment Review, new dispute resolution procedures introduced for British businesses in October last year also appear to have little impact on workplace disputes.

Few of the organisations polled reported a decrease in disputes or any decline in the number of disputes settled by compromise agreements or tribunal hearings.

Almost half the organisations, (47 per cent) included confidentiality clauses within all contracts of employment, to take effect on an employee's departure.

A further fifth did this for some employees, and a third said they did not do this at all. Arrangements made when a member of staff leaves can be as complex as those in place during their employment, the survey found.

One key finding was that not everyone got the same notice period. Just a fifth of organisations polled said that all employees had the same contractual arrangements governing the length of notice periods, while a significant majority, seven in 10, said this was not the case.

In organisations that had different notice periods, more than half used seniority as the basis and while 15.9 per cent had separate arrangements for blue- and white-collar employees.

The appeared to be little drive to standardise terms, suggesting this is not a problem for most organisations, said IRS.

Most organisations – some seven out of 10 – expected staff who resigned to work their notice in full and a fifth allowed them to leave early by agreement; fewer than one in 10 would held them only to a proportion of their notice period while fewer than one in 32 did not expect them to work their notice.

Employees who were made redundant were more likely to be allowed to leave early.

Just under a fifth of respondents said an employee would have to work their full notice period in this situation.

Just over a fifth had non-competition clauses for all employees that took effect when they left, and a quarter had them for some employees.

Confidentiality and non-competition clauses most commonly applied to directors and senior managers and sales staff, it added.

Just over one in 10 employers had made changes to their use of compromise agreements over the past two years.

IRS Employment Review managing editor Mark Crail said: "Whether an organisation has a problem with staff turnover or simply sees it as an opportunity to rejuvenate the workforce, good practice in handling staff departures can protect both reputation and bank balance."