Fond farewells - or confidentiality clauses and compromise agreements?

Two-thirds of employers use compromise agreements to prevent staff from taking the organisation to an employment tribunal when they leave, according to research released by IRS Employment Review, published by LexisNexis Butterworths. The information was provided anonymously as part of a survey into the arrangements that organisations make when staff leave.

New dispute resolution procedures introduced in October 2004 appear to have little impact on workplace disputes. Few of the organisations that took part reported a decrease in disputes or any decline in the number of disputes settled by compromise agreements or tribunal hearings.

Almost half the organisations (44.6%) include confidentiality clauses within all contracts of employment, to take effect on an employeeís departure. A further fifth (22.3%) do this for some employees, and a third (32.9%) do not do this at all.

The survey reveals that the arrangements that organisation make when members of staff leave can be as complex as those in place during their employment. It looks at notice periods, confidentiality and non-competition clauses, and compromise agreements ñ a widely used but little discussed tool often seen as a convenient way of easing otherwise difficult departures.

The survey covers 94 employers across all sectors, with a total of 121,578 employees. It shows that they lost just under a sixth (14.6%) of their combined workforce in the previous 12 months ñ mostly through voluntary departures due to resignation and retirement, a larger proportion than is the case across the economy as a whole - but also through redundancy and dismissal.

Other key findings include:
Not everyone gets the same notice period. A fifth (21.2%) of those surveyed said that all employees have the same contractual arrangements governing the length of notice periods, while a significant majority of seven in 10 (77.6%) said this was not the case.

In organisations that have different notice periods, more than half (52.1%) used seniority as the basis and while 15.9% had separate arrangements for blue- and white-collar employees. However, there is little drive to standardise terms ñ suggesting that this is not a problem for most organisations.

While most organisations (69.1%) expect staff who resign to work their notice in full, a fifth (22.3%) would allow them to leave early by agreement; fewer than one in 10 would hold them only to a proportion of their notice period while less than one in 32 would not expect them to work their notice.

Employees who are made redundant are more likely to be allowed to leave early. Just under a fifth (19.1%) of respondents said an employee would have to work their full notice period in this situation.

Just over a fifth (21.2%) organisations have non-competition clauses for all employees that take effect when they leave, and a quarter (24.4%) have them for some employees.

Confidentiality and non-competition clauses most commonly apply to directors and senior managers and sales staff.

Just over one in 10 employers (13.8%) made changes to their use of compromise agreements over the past two years.

According to IRS Employment Review managing editor, Mark Crail:

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. So, managing the current complexity of arrangements can present major challenges to managers, particularly those with HR responsibilities.

This might explain why employers remain hopeful that the government’s new statutory dispute resolution process will prove helpful in the future, even though they have seen relatively few benefits to date. Anything that holds out the promise of smoothing an often tortuous process has to be welcomed.