How should HR handle termination payments when an employee is under investigation for misconduct?

Hina Belitz has written an article for People Management Magazine questioning ‘How should HR handle termination payments when an employee is under investigation for misconduct?’ For the full article please visit People Management Here

Dame Alison Rose, the former CEO of NatWest, is set to receive a £2.4 million severance package while serving her 12-month notice period. However, this has sparked controversy, as she admitted to a “serious error of judgment” regarding a BBC story that accused Nigel Farage of losing his Coutts account due to falling below the bank’s wealth threshold. This situation raises important employment law questions, especially regarding misconduct termination and employee entitlements.

Notice pay is a contractual right, but employers can terminate an employee without notice or payment in lieu if gross misconduct is involved. However, even in such cases, employees with over two years of service may claim unfair dismissal if the company does not follow a fair procedure. Employers must conduct a thorough and fair investigation into the employee’s actions, especially when dealing with senior executives.

Severance pay may be negotiated when an employee enters into a settlement agreement with their employer. The amount is typically confidential and depends on various factors. When dealing with senior employees, offers should reflect potential claims and the time it might take the employee to find new employment. Employers should be cautious not to appear to reward misconduct.

The final payment to a departing employee is determined by the outcome of the company’s investigation. Gross misconduct may result in no notice or severance payment, while poor performance may lead to the reduction of discretionary benefits. Senior executives often have other income sources, like pension funds, which remain unaffected by negotiations or investigations.