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Employment Law Update - 29th July 2013 - Click for larger version Employment Law Update - 29th July 2013

A number of employment law changes take place with effect from today, Monday 29 July 2013. Namely, the introduction of fees into the employment tribunals, new tribunal rules of procedure, a new cap on the unfair dismissal compensatory award, the inadmissibility of pre-termination negotiations in unfair dismissal cases and compromise agreements being renamed.

Pre-termination negotiations

Section 14 of the Enterprise and Regulatory Reform Act 2013 (ERRA 2013) inserts a new section 111A into the Employment Rights Act 1996 to allow employers and employees to engage in confidential, "off the record" discussions and negotiations about parting ways on the basis of mutually agreeable terms which will be inadmissible in evidence in an ordinary unfair dismissal case unless there has been "improper behaviour" by a party. The related statutory Acas Code of Practice on Settlement Agreements also came into force today. The Code focuses on the key requirements that pre-termination negotiations must meet in order to be treated as confidential and therefore inadmissible. This change is designed to give employers greater protection when offering settlement agreements outside the context of litigation. However, employers need to be aware that there are significant limitations on when the negotiations will be treated as confidential. Where negotiations are not protected by confidentiality, they will become admissible in any future dispute before an employment tribunal. On a positive note, there is no need for the parties to be in dispute before a confidential pre-termination negotiation under section 111A can be initiated in contrast to the current position under the common law “without prejudice” regime. To take full advantage of the opportunities offered by the new regime, employers should assess when it is appropriate to initiate a pre-termination negotiation, and ensure that there is a clear basis for making the approach (for example, performance issues). This basis should be documented and discussions should be conducted in accordance with the Code.

"Compromise agreements" to be renamed "settlement agreements"

Section 23 of ERRA 2013 renames compromise agreements and compromise contracts as "settlement agreements" in all relevant pieces of legislation. These are binding agreements between the employer and employee (or other parties to a statutory claim) which effectively settle a case or prevent the employee from instituting or continuing certain proceedings. A settlement agreement may be entered into when employment is continuing, but in most situations, employment will have terminated or be about to terminate. Usually, termination is imminent, if it has not already taken place by the time the agreement is entered into. The government explained the rationale for the change was that it would improve dispute resolution rates, because the term "settlement agreement” more accurately describes the content of the document and will help to avoid any party refusing to sign an agreement on the grounds that they do not want to be seen as 'compromising'.

Employment Tribunal Fees

The new Employment Tribunals Rules of Procedure come into force today and employment tribunal and EAT fees have also been introduced.

Unfair Dismissal

The unfair dismissal compensatory award limit has changed to the lower of the statutory cap (currently £74,200) or one year's gross pay.

Please get in touch below if you require advice on a specific employment matter.

Last updated: 9.02am, Tuesday 30th July 2013

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