Settlement agreements are becoming an increasingly important instrument in the UK labour market. They were introduced in July 2013 to replace the old `compromise agreements` that had been in place for many years. These agreements allow an employer and employee to come to a mutual agreement and settle any disputes between them. One of the key features of settlement agreements is that they require the employee to waive any right they may have to bring a claim against the employer, in return for an agreed payment.
The introduction of the Senior Managers and Certification Regime (SMCR) in 2016 has changed the way that settlement agreements are used in the financial services sector. Under the SMCR, there are increased expectations around the accountability and responsibility of senior managers in financial services firms. As a result, settlement agreements are increasingly being used to deal with conduct issues relating to senior managers.
One of the key differences between settlement agreements under the SMCR and those used in other industries is the requirement for the regulator to be notified. The Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) require firms to notify them when a senior manager leaves, regardless of the reason. This includes cases where a senior manager leaves as a result of a settlement agreement.
The notification process requires firms to provide details of the senior manager, including their name, job title, and the reason for their departure. There is also a requirement to provide a `statement of responsibilities` outlining the responsibilities of the senior manager while they were in post. This is to ensure that the regulator is aware of any potential conduct issues that may arise as a result of the departure.
Settlement agreements under the SMCR can be complex and involve a number of parties, including the employee, the employer, and the regulator. It is therefore important that these agreements are carefully drafted and reviewed by experienced legal professionals.
In conclusion, settlement agreements under the SMCR are becoming an increasingly important tool for dealing with conduct issues relating to senior managers in the financial services industry. As a professional, it is important to ensure that any content relating to settlement agreements under the SMCR is clear and accurate, and takes into account the requirements of the regulator. This will help to ensure that the content is both informative and accessible to those who need it.