Consultation on new Code of Practice on Settlement Agreements

The Government is introducing new legislation which is aimed at ensuring that any offers or discussions about any settlement of employment claims with a member of staff cannot be used as evidence in an unfair dismissal claim unless either party has engaged in some form of inappropriate behaviour.

ACAS had produced a draft Code of Practice to accompany the new legislation. The legislation will rename "compromise agreements" (see our Free Factsheet) "settlement agreements". The Draft Code produced by ACAS is intended to provide a clear explanation of the new legal proposals relating to inadmissibility when discussing and negotiating settlement agreements. The consultation ends on the 9th April 2013. In addition to the production of a draft Code, ACAS has also produced npn-statutory guidance which will include expectations as to good practice in offering and negotiating settlement agreements.

The Draft Code includes a number of provisions. These include a statement that an intitial offer of settlement should be made in writing (although the Government does not propose that a failure to make an offer in writing will amount to "inappropriate behaviour". The Draft Code also proposes that the parties should allow a reasonable period of time for the offer of settlement to be considered and suggests a period of 7 days as a minimum period for this purpose. TRhe Draft Code also proposes that an employer should allow an employee to be accompanied at a meeting to discuss settlement agreement, by either a work colleague, or a trade union official. The Draft Code sets out some examples of "improper behaviour" such as intimidation or reducing a financial offer during the 7 days period in which the employee has to consider the offer.

There has been some discussion of the relevance and likely impact of this legislation. Employers should note that it will not cover claims of unlawful discrimination, so will not be applicable to every offer of settlement that an employer may want to make. So employers will need to address the process with some caution when they come into effect. There is also the fact that many employers do not generally want other members of staff to know of the proposed settlement, which may become inevitable if the employee has the right to be accompanied in a meeting to discuss settlement. Furthermore, employers may be concerned about the proposal that they will have to allow an employee up to 7 working days to consider the offer, so these proposals do not offer a "quick fix" to the issue of settlement.

If you require any help or assistance on the matters raised in this article do not hesitate to contact us at Hallett Employment Law Services Ltd.