On 29 July 2013, Compromise Agreements were re-named Settlement Agreements. The use of the word ‘compromise’ was thought to have implied that one of the parties is compromising their position and therefore on the face of it may seem unfair. The legal position relating to the actual settlement agreement itself is the same as for Compromise agreements. Therefore, on the face of it, they are essentially the same as Compromise Agreements, as the same conditions need to be satisfied for them to be legally binding.
The new part, however, is the introduction of ‘confidential’ pre-termination discussions which cannot be used in any subsequent tribunal proceedings. This new concept was necessary because the only other legal construct within which such discussions could take place before 29 July 2013 without the employer being in fear that the matters discussed would be referred to in any subsequent claim was the “Without Prejudice” discussion. Without a pre-existing dispute that the “Without Prejudice” discussion was intended to resolve, there was always a risk that the content of the discussion would not be protected and could be referred to in Court and/or used as the basis of a separate claim. The new rules allow greater flexibility so that confidential discussions can be initiated as a means of ending the employment relationship before any formal “dispute” has arisen. This new rule will run alongside the existing without prejudice rule, which will continue to apply where the necessary conditions are met.
The aim is to provide a mechanism to allow parties the opportunity to have frank conversations about terminating the employment relationship. However in practice the impact may be limited, as the discussions will only remain inadmissible in ordinary unfair dismissal proceedings. They will continue to be potentially admissible in, for example, automatically unfair dismissal, breach of contract, or discrimination cases albeit the usual “without prejudice” rules will still apply.
Furthermore, if anything was said or done which in the Tribunal’s opinion was improper, or was connected with improper behaviour, then evidence is inadmissible only ‘to the extent the tribunal considers just’.
Acas have published a statutory code of practice on Settlement Agreements. The Code includes a list of what can amount to improper behaviour. For example, it provides that all forms of harassment, bullying or intimidation; or physical assault or the threat of physical assault or any other criminal behaviour, will constitute “improper behaviour”.
It remains to be seen whether the new Settlement Agreements will help to simplify the termination process.
For more information on this please contact us on 01483 303636.