Compromise Agreements are a thing of the past! But fear not as they have been replaced with Settlement Agreements that appear to give employers greater flexibility.

Settlement Agreements and confidential protected “pre-termination negotiations” can now be entered into even when there is no dispute between an employer & employee.

This only applies to matters that might otherwise be taken to tribunal as an unfair dismissal claim; this seems only right to us that cases of discrimination or harassment couldn’t be swept away by any kind of agreement that waives an employees right to a tribunal.

What this does now mean however is that as an employer, there is a process by which you can discuss sensibly with an employee, reaching an agreement to end their employment without fear of any recourse at tribunal even if you are not in a disciplinary or grievance situation.

Of course there is a Code of Conduct and set of procedures to follow so we’d suggest anyone thinking about entering into any such discussions gives us a call and reads the ACAS guidelines before taking any action.

The key points for you to be aware of are as follows:

• Previously, Compromise Agreements were generally undertaken on a “without prejudice” basis when there was already a dispute between an employer and an employee – for example where disciplinary or grievance procedures had been implemented – the “without prejudice” meeting remained confidential and could not be used at tribunal as evidence. If there was no dispute then there was no protection of confidentiality in meeting on a “without prejudice” basis.

• Settlement Agreements will allow for confidential meetings, that cannot be referred to at tribunal proceedings,to discuss the termination of employment, to take place where there is no existing dispute and so where meeting on a “without prejudice” basis would not be relevant.

• This is in addition to the ability to still meet on a “without prejudice” basis where there is a conflict between employer and employee.

• Settlement Agreements will still be legally binding contracts that waive an employee’s right to bring a tribunal claim relating to matters that the Agreement covers.

• They will therefore have very similar requirements to a Compromise Agreement in terms of what must be set out in writing, and the need for the employee to have taken independent advice.

• There are still limitations as to when pre-termination negotiations are the best way to resolve employment matters, as they are only not admissible in ordinary unfair dismissal tribunal claims – for example confidentiality of the discussions would not be protected in cases where a claim of discrimination or automatically unfair dismissal might be made – you should therefore check that the matter under discussion will be protected before starting any pre-termination negotiations with the intention of reaching a Settlement Agreement.

• Also no protection is afforded if there has been “improper behaviour” such as harassment or putting undue pressure on either the employer or employee to agree to a settlement. A full list of what constitutes improper behaviour is available in the ACAS Code.

• Both employers and employees can propose a Settlement Agreement.

• Both parties should be allowed at least 10 days to consider any proposed Settlement Agreement, during which time they should take independent advice.

• Employees can be permitted to be accompanied to pre-termination negotiation meetings if this is appropriate and both parties are in agreement to it.

The above is only a summary and does not cover all details of the Settlement Agreement Code of Practice. We therefore strongly recommend that you read the full ACAS Code, and keep it to hand in case you need it.


Free eBook!

Simply provide your details to receive your free ebook '7 Questions For Sure-fire Success As An Employer'. You will then receive important legal updates, HR tips and important news right into your inbox.

By the way, we can't stand spam so be assured that we will never share your information. 

You have Successfully Subscribed!