The Acas Code of Practice on Settlement Agreements has now been revised and published in response to a consultation earlier this year. The Code is presently awaiting approval by Parliament and is likely to come into force at some point over the summer.
The Code outlines how new legislation brought in by the Government this year will mean that "pre termination negotiations" between the employer and employee will not be admissible as evidence in cases of unfair dismissal.
The reforms are part of the Government's desire to reduce the regulatory burden on business and are designed to allow employers more freedom to have discussions with employees about a proposed termination. Presently it is very difficult to have such discussions without those discussions giving rise to a claim.
Employers are therefore going to have increased flexibility when wanting to bring about an end to the employment relationship where they are prepared to negotiate. Equally employees will also be allowed to propose settlements without this being held against them if no agreement is reached.
The Code stands as a guide and failure to follow it will not, in itself, make an employer liable to proceedings or lead to adjustment in any compensation, although a tribunal may have regard to compliance with it.
Negotiations will be permitted to take place both orally and in writing. For any agreed settlement to be binding, and preclude the bringing of tribunal proceedings, the settlement will still need to be evidenced in a compromise agreement (now re-named 'settlement agreements'). In addition the new rules will only apply to 'ordinary' cases of unfair dismissal and will therefore not protect an employer in cases concerning discrimination, automatically unfair dismissals or where the employer has acted improperly. The Code outlines what may be considered 'improper' conduct and includes such behaviour as bullying, harassment, discrimination or the placing of undue pressure on an employee.
Whilst the new rules will certainly increase the flexibility as to how an employer may go about terminating an employee's employment it is unlikely to provide a wholly straightforward and simple exit strategy in itself. Employers will still want to have a strategy to rely upon should negotiations break down and for introducing the idea of a termination settlement in the first place.