When contemplating whether to negotiate a settlement with a departing employee, you should consider the following:
1. Proceed with caution!
You must be very careful when you are making the offer, especially if the employee has not yet been dismissed as it could amount to a fundamental breach of contract and entitle the employee to resign and claim constructive unfair dismissal. You should attach "without prejudice" to any conversations or correspondence on the offer, but note legal privilege will still only apply if there is a genuine dispute. If the offer is made before or during any relevant procedure you should make it clear that this is an alternative resolution and that you will follow due process if the offer is rejected.
2. What is the reason for the employee`s departure and the purpose of the financial settlement? This could make a difference on the amount you offer.