New regime for compromise agreements from 29 July 2013

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Compromise agreements are to be re-named ‘settlement agreements’ and pre-termination discussions will be inadmissible in unfair dismissal cases from 29 July 2013.

Compromise agreements are used by employers to record severance arrangements with departing employees. The main feature of a compromise agreement is that it waives an individual’s right to make a claim in the employment tribunal or court.

From 29 July 2013 the nomenclature will change as all references to ‘compromise agreements’ or ‘compromise contracts’ in relevant legislation will become ‘settlement agreements’. This is really a change of style over substance but the government believes the new wording better reflects the reality of such agreements…

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