The new Settlement Agreements and Pre-Termination Negotiations come in to effect on Monday 29th July 2013. Both reforms go hand-in-hand and will replace Compromise Agreements. This is a major change in employment law under section 14 of the Enterprise and Regulatory Reform Act 2013.
But what does it really mean for employers?
Hopefully, it will open the doors to pre-termination discussions between employers and employees and it will be inadmissible in any ordinary unfair dismissal proceeding. There are certain conditions of course. The main points of the pre-termination discussion are:
- Either the employee or the employer can start the discussion
- All pre-termination discussions are confidential
- There is no right to be accompanied, however, this is best practice
- Meetings should take place at an agreed time and place
- There must be no signs of ‘Improper Behaviour’, eg. Discrimination, aggressiveness, bullying, undue pressure, etc.
- Early discussion can be verbal, but after some negotiation, the formal settlement proposal should be made in writing
It is important to bear in mind that pre-termination discussions are voluntary. Neither party has to enter into discussions or accept any offers of settlement.
Where the pre-termination discussion break down and end, neither party can use it in evidence against the other at a tribunal. Therefore, employers are protected from constructive dismissal claims for talking to an employee about ending their contract, as long as proper and fair procedures have been followed.
The Settlement Agreement itself also comes with some strict guidance on how it should be applied. Following the pre-termination discussions, any details that have been agreed need to be set out in writing by the employer and issued to the employee. The employee then has to be given a reasonable period of time to consider the offer. The guidance is 10 days in normal circumstances.
Other key areas of the Settlement Agreement are:
- It must be in writing
- It must relate to a specific complaint
- The employee must have had specific legal advice on the agreement before accepting it
- It must state that the statutory conditions relating to the agreement have been satisfied
- Termination can take effect following the suitable amount of notice, or on a specified date
The new rules are expected to work quite well for employers with normal employment issues or disputes. However, things are rarely that simple and it is anticipated that some more unusual influencing factors will also play a part in any termination or settlement. Employers are advised to protect themselves by have a full policy in place for Pre-termination Discussions and Settlement Agreements.
Local HR & Employment Law consultants, SCRSolutions Ltd are offering pro-active employers a free template policy which can easily be incorporated in their own Company. The policy is available for download from their website for a limited time only – www.SCRSolutions.co.uk
