The Government have inserted a new clause in the Enterprise and Regulatory Reform Bill to encourage greater use of settlement agreements which they state will make it easier and quicker for all employers to end the employment relationship by mutual agreement.
Under the proposed new ‘protected settlement offer’ clause, ‘Confidentiality of negotiations before termination of employment’, in determining any matter arising from an unfair dismissal claim, an employment tribunal may not take account of any offer made or discussions held, before the termination of the employment in question, with a view to it being terminated on terms agreed between the employer and the employee. The protection afforded to the offer and details of the related conversation only applies to unfair dismissal claims, except those which are considered automatically unfair by the Employment Rights Act 1996 or any other Act, which are not protected, e.g. whistleblowing dismissals. The protection will only apply to the extent which a tribunal considers just, where anything said or done was, in the tribunal’s opinion, improper, or was connected with improper behavior. The new measures appear to be a combination of easier use of settlement agreements combined with a form of the ‘protected conversations’ proposals announced in the Employment Law Review, but restricted purely to unfair dismissal. A BIS spokesperson has indicated that settlement agreements within the format of the new ‘confidentiality of negotiations’ clause is the ‘preferred option’ to having separate provisions for protected conversations. A consultation will be published in the summer on the principles of guidance for using settlement agreements, and it is hoped that this may produce further clarity on the extent of the new measures, since at the moment, there are more questions than answers on their application, particularly in terms of the definition of a confidential discussion with a view to termination and the interrelationship with other claims, e.g. a discriminatory dismissal, or one which also involves a breach of contract.
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