Compromise agreements will be renamed "settlement agreements". The use of these new agreements will be facilitated by new rules in relation to pre-termination negotiations.
Workplace expert Acas have published guidance to accompany its new Code of Practice on Settlement Agreements which came into force this summer. Settlement agreements are legally binding contracts, which can be used to end an employment relationship on mutually agreed terms.
The new guidance is designed to help employers and employees understand when to use settlement agreements, and how they can be negotiated.
The guidance includes check-lists for employers and employees, including:
Pre-termination negotiations become inadmissible in unfair dismissal proceedings
Evidence of "pre-termination negotiations" between an employer and employee will be inadmissible in ordinary unfair dismissal claims. This goes further than the "without prejudice" principle as it will apply even where no formal dispute has yet arisen. The legislation applies to negotiations held with a view to terminating employment under a settlement agreement.
Employment tribunal fees
From the end of July, claimants in employment tribunals were required to pay a fee to issue their claim, together with a further fee payable three to four weeks before the hearing.
Don’t expect the new rules to deter claimants though, as they can apply for remission of all or part of the fee, depending on their financial circumstances.
New employment tribunal rules
Changes to employment tribunal rules include the following:
Reduced cap on the compensatory award for unfair dismissal introduced
An individual cap of 12 months' pay in relation to the compensatory award for unfair dismissal is introduced. The individual cap will apply where this amount is less than the overall cap, currently £74,200.
Redundancy consultation obligations
Following a recent Employment Appeal Tribunal decision, if you are proposing 20 or more redundancies across a business, you will now be required to collectively consult. Previously, collective consultation obligations only applied if the redundancies were proposed in any one 'establishment'. The good news is that the decision is likely to be appealed.
Employee shareholder status
From 1 September, if employers give their workers at least £2,000 of shares, they can ask them to waive (among other claims) their right not to be unfairly dismissed. Upon disposal of the shares, the first £50,000 of gains will be exempt from capital gains tax.
Unfair dismissal and political opinion
From the end of June, you can’t fire employees for their political views: if the reason or principal reason for the dismissal is, or relates to, the employee's political opinions or affiliation, the employee does not need to have any qualifying service in order to bring an unfair dismissal claim.
TUPE reform
The Transfer of Undertakings (Protection of Employment) Regulations 2006 protects employees when the business they work for is transferred to a new employer. The government is looking to bring in a number of changes to these regulations later this year - the most significant being the proposed removal of the protection connected with a 'service provision change'.
Post-employment victimisation
There are conflicting decisions on whether the Equality Act protects employees from being victimised after they have left employment. This matter is due to be heard by the Court of Appeal later this year but, in the meantime, tread carefully in your treatment of such employees.
For more information about People Matters please visit the feature here.
