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Acas response to consultation on draft statutory Code of Practice on Settlement Agreements

The much anticipated response to the consultation on the draft statutory Code of Practice on Settlement Agreements has been published by Acas. The Code will accompany the new provisions on settlement agreements which make pre-termination settlement offers inadmissible in an employment tribunal providing there has been no ‘improper behaviour’ by either one of the parties.

The most important points to note from the revised Code are:

  • The Code is designed to focus on the inadmissibility of settlement offers rather than settlement agreements in general.
  • The Code makes it clear what information is required to make the settlement agreement legally valid.
  • Initial settlement offers can be made orally but the final agreement must be in writing.
  • The recommended period for considering a settlement offer has been increased from 7 to 10 calendar days, although the parties can agree a longer reasonable period.
  • Although there is no statutory right to be accompanied at a settlement discussion, the Code refers to allowing employees to be accompanied as ‘good practice’.
  • The illustrative list of what amounts to ‘improper behaviour’ has been expanded (further details below).
  • The template letters have been removed from the Code and are instead enclosed in the non-statutory guidance.

A key point of interest from the Code is the non-exhaustive list of ‘improper behaviour’ which would deem settlement discussions admissible in a tribunal. The following list provides some examples of ‘improper behaviour’:

  • All forms of harassment, bullying and intimidation, including through the use of offensive words or aggressive behaviour.
  • Physical assault or the threat of physical assault and other criminal behaviour.
  • All forms of victimisation.Discrimination because of age, sex, race, disability, sexual orientation, religion or belief, transgender, pregnancy and maternity and marriage or civil partnership.
  • Putting undue pressure on a party. For instance:
    • Not giving the either party a reasonable period of time for consideration as set out in paragraph 12 of the Code.
    • An employer saying before any form of disciplinary process has begun that if a settlement proposal is rejected then the employee will be dismissed.
    • An employee threatening to undermine an organisation’s public reputation if it does not sign the agreement, unless the provisions of the Public Interest Disclosure Act 1998 apply.

The government has suggested that the Code and the settlement agreement provisions will be implemented this summer. An Acas booklet entitled ‘Settlement Agreements: A Guide’ containing the non-statutory guidance (including template letters) is also due to be published.

Following the implementation of the Code it is inevitable that we will see cases considering what does and what does not amount to ‘improper behaviour’. It would appear that the term widens the previous term of ‘unambiguous impropriety’ used as part of the without prejudice rule. Considering the government’s goal of cutting red tape it is questionable to what extent the changes will facilitate settlement discussions.

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Legal news, views, trends and tools for HR Professionals. Stay ahead. Go further