Settlement agreements – will they bring clarity or confusion?

Acas has published its response to the consultation on the draft Code of Practice on settlement agreements (also known as compromise agreements) concerning pre-termination negotiations.

Settlement agreements and compromise agreements are widely used in workplaces to resolve disputes swiftly and to avoid potential employment tribunal claims.

Under the new proposals, employers will be free to initiate discussions about settlement agreements before a formal dispute exists, and even before employees are aware that they face problems at work. Also, any offers or discussions about settlement agreements cannot be used as evidence in an unfair dismissal claim unless either of the parties has engaged in some’ improper behaviour’. The Acas Code lists some examples of improper behaviour which includes “all forms of harassment, bullying and intimidation”.

If there is a dispute about what amounts to improper behaviour, it will ultimately be for an employment judge to decide. It remains to be seen how tribunals will deal with complaints about improper behaviour during settlement discussions.

The Acas Code of Practice on settlement agreements will come into force on 29 July 2013. Please click here to read the ACAS response to the consultation and the Code of Practice on settlement agreements.

For further information on settlement agreements or compromise agreements, please contact our employment lawyers based in Canary Wharf, London on 0207 956 8699 or email info@rllaw.co.uk.