New Provisions for Settlement Agreements and Confidential Discussions

The 29th July brought new legislation into force which provides protection to employers who want to have a frank discussion with an employee about negotiating their termination of employment under a settlement agreement (formerly known as a "compromise agreement").

Previously it was quite risky for an employer to open this sort of discussion; there was always the chance that the employee would be able to claim they had been constructively dismissed, as they could argue the employer had made it clear they wanted to get rid of them.  From now on, this sort of discussion would be inadmissible in a claim for constructive or unfair dismissal. 

As you would expect, there are rules that the employer needs to follow in order to be protected, and these have been set out in a new Code of Practice from ACAS.  The key thing is that the employer should avoid confronting the employee with a "take this offer or you will be sacked" approach! 

It is worth noting also that this does not provide any protection if the employee were to claim under discrimination legislation or if they claimed unfair dismissal in a number of special cases (e.g. in relation to whistle blowing).