Engineering a Severance Package from a Performance Improvement Plan

Client Situation

A senior employee was told he would be placed on a performance improvement plan. He considered the performance allegations a sham designed to pressure him into resigning, but he had no intention of leaving on notice pay alone. The employer had not offered any settlement agreement as an alternative to the PIP and was pushing ahead without giving him that option. 

The client needed to create leverage to prompt a settlement offer that didn’t yet exist and to maximise the time he remained employed on full pay while negotiations unfolded.

What We Advised On

Step 1: Grievance Timing

We advised the client on both the content of a formal grievance and, critically, the right moment to submit it. Filing the grievance first paused the PIP immediately, keeping the client in employment on full pay while the company carried out its investigation.

Step 2: Without Prejudice Approach

Once the grievance outcome was issued (approximately two months later) and as the employer attempted to restart the PIP, we sent a without prejudice letter setting out settlement terms, pausing the PIP for a second time while negotiations began.

Step 3: Settlement Negotiation

We negotiated the ex-gratia payment upward to the employer’s best and final offer, then advised on the full settlement agreement. This included the meaning and scope of the client’s restrictive covenants and the negotiation of a reduction or full waiver of the six-month non-compete clause.