New summer timetable — settlement agreements and other reforms

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The new Enterprise and Regulatory Reform Act renames compromise agreements ‘settlement agreements’ and, once the relevant provisions come into force, if an employer makes an offer of settlement before a formal dispute has arisen and follows the statutory ACAS Code of Practice, an employee will not be able to give evidence of the offer at any subsequent tribunal hearing. However, the confidentiality of negotiations is preserved only in relation to an ordinary unfair dismissal claim (so not including automatically unfair dismissals or discrimination claims).

Having consulted on a first draft in February, ACAS has now published a revised code of practice. The new version deals mainly with the confidentiality provisions and, although it does list the requirements for a settlement agreement to be legally valid, it does not now specify how settlement offers should be made, beyond making it clear that, while an initial offer can be made orally, the final agreement must be in writing. Employees should also be allowed to be accompanied at settlement agreement meetings, even though this is not a statutory requirement. The template offer letters to employees, included in the previous draft, will now be demoted to non-statutory guidance…

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