ACAS Publishes ‘A Guide: Settlement Agreements’.

Published: 6 August 2013

The ACAS Code of Practice on settlement agreements must be taken into account by an employment tribunal when it’s asked to determine whether a discussion about a settlement agreement is admissible.  But what do the experts think about the code?

Anna Fletcher, Director and solicitor in the Employment Team at Wragge & Co:

“The final Code of Practice on Settlement Agreements has sought to remove the scope for uncertainly about the use of confidential settlement discussions. Time will tell whether they have got it right but there has to be a genuine concern that Tribunals will still need to work through a load of satellite ligation before we know how they will actually work. Attractive for employers and rich pickings for lawyers but it renders the idea pretty risky and – dare I say it – potentially ineffective.

Take the examples of improper behaviour. The list is not exhaustive so there is plenty of room for argument. And why wouldn’t an employee allege their employer hasn’t behaved properly if they think their job is at risk or get an offer out of the blue? Employees also have at least 10 days to consider an offer. That’s a long time to mull it over and to keep something confidential – especially when there appears to be an expectation in the code that the employee will be accompanied at these meetings as well.

And as for second guessing whether discrimination or automatic unfair dismissal will later be argued – where discussions will be admissible before the tribunal – will employers really want to take that risk? One thing that is certain is that a confidential settlement is not going to be an easy way out for an employer seeking to circumvent following a proper procedure.”

Innes Clark, Head of employment at Morton Fraser.

“There are important differences to the previously published draft Code:

There is no longer a requirement for the initial termination settlement offer to be in writing (although any final offer must be in order to be valid);

The template letters are not included and instead will appear in non-statutory guidance;

The requirement that employees must have a minimum of 10 calendar days (as opposed to 7) to consider any settlement offer; and

Adding an expectation that employees will be accompanied at any pre-termination negotiations by a colleague or Trade Union representative albeit recognising that this is not a legal requirement.”

Craig Gordon from HRBullets comments:

“Confidential pre-firing discussions with staff and no danger of what you say being used in an unfair dismissal claim. Sounds like the answer to an employer’s prayer. Follow the ACAS code and all will be well. But things aren’t that straightforward.

There’s scope for confusion between the new confidentiality provisions and the existing ‘without prejudice’ rules. Litigation on the scope of ‘improper behaviour’ (which will disapply the confidentiality provisions) seems likely, despite the examples given in the Code. And given the fact that the confidentiality provisions won’t apply to grounds other than unfair dismissal, what about the by no means uncommon scenario where a discrimination claim accompanies an unfair dismissal claim?

How will the admissibility of the pre-termination settlement discussions be handled in such a scenario where both claims are inextricably interlinked?”

More reading on this subject: HR Bullets Article by Simon Stephen of Wragg & Co LLP

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