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They've not kept it quiet
November 2009
THEY’VE NOT KEPT IT QUIET
An employee is leaving under a compromise agreement. The terms should be confidential but it seems that they are being discussed all over your workplace. You have not said anything so it must be them. Can you withhold the payment?
Must keep it quiet
If you need to get rid of a problem employee, a compromise agreement can be a useful tool. By entering into the agreement the outgoing member of staff agrees not to bring any legal action against you – in return for a sum of money..
Tip 1. Negotiations around a proposed compromise agreement should be always on a “without prejudice” basis. This means that neither side can discuss them with any unauthorised third party, e.g. other employees. Always make this clear to the employee in writing.
Tip 2. The employee should be permitted to discuss the proposed terms with their legal advisor and close family members, e.g. partner.
Not said a word
Most employees will keep this sort of matter to themselves. But what if they don’t min and you later discover they have been discussing it with their colleagues? Would this allow you to refuse to pay them the agreed amount?
Recent case
This situation arose in Dunedin Canmore Housing Association v Donaldson 2009. Following disciplinary proceedings it was agreed that Donaldson (D) would leave under a compromise agreement. In return, her employers would pay her £9250. She was told to “keep matters quiet” and this was reinforced to her when she signed the compromise agreement as it contained a very clear confidentiality clause.
Cat out the bag. It soon transpired that D had discussed the terms with a colleague, Paul Rankeillor ( R ) who had, in turn, divulged them to other employees.
Less than honest
As a result, Dunedin refused to pay up so D sued for her money. At first she insisted that she had not said a word to R about the terms, but he gave evidence against her. So D backtracked, saying that as she had no legal training she did not understand the law, or appreciate the implications of disclosing the proposed terms, ie. she did not know what the word “confidential” meant.
EAT decision
But the Employment Appeal Tribunal had no sympathy for her. It said it was clear D had discussed the terms with R – thus breaching confidentiality – and her arguments about legal training were irrelevant. All that mattered was whether she could understand the requirement of confidentiality in “simple human terms”. It felt that she could and because of this her employer did not have to pay her £9250.
Costs awarded. D’s employer was also awarded its costs as the EAT took the view that D should never have tried to sue in the first place.
Tip. A compromise Agreement should always contain a specific clause which states that the terms and discussions are to remain confidential. Any breach of this would give you the right to withhold payment.
Source: Tips & Advice Personnel 15 October 2009
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