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Pre-termination negotiations no longer admissible as evidence for ordinary unfair dismissal claims

21st August, 2013

The introduction of various changes to employment legislation was brought in on 29 July, which will inevitably impact on employers and employees alike. On this day alone we have seen the introduction of tribunal fees, new tribunal rules, a reduced cap on compensatory awards for unfair dismissal and importantly, the introduction of new laws to promote early settlement of employment disputes.

Perhaps one of the most significant changes is that to settlement agreements. Settlement agreements, formally known as compromise agreements, are legally binding contracts that can be used to end the employment relationship on agreed terms and settle potential employment tribunal claims.

The new legislation, which is contained in the Enterprise and Regulatory Reform Act 2013, provides that any pre-termination negotiations in respect of settlement agreements cannot now be used as evidence in an ordinary unfair dismissal claim. Essentially, what this means is that an employer can now approach employees about potential termination of employment even where there is no prior dispute.

Before 29 July 2013 there needed to be an existing dispute before ‘without prejudice’ discussions could take place.

However, employers must be aware that the confidential protection falls away where there is deemed to be ‘improper behaviour’ or a claim which is not straightforward ordinary dismissal, such as automatic unfair dismissal or discrimination.

Whilst it remains that settlement agreements should be in writing with ten calendar days for the employee to respond, and that the employee must seek legal advice, Aaron & Partners urges any manager considering pre-termination negotiations to also seek legal advice as there are some important limitations to the new rules.

For information or advice in relation to pre-negotiations or assistance with drafting, negotiating or finalising settlement agreements, please contact Helen Watson,on 01244 405565 or email [email protected].

 

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