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29th June, 2012

When the Enterprise and Regulatory Reform Bill (“the Bill”) was revealed in the Queen’s Speech in May 2012, amongst other things, it sought to introduce early ACAS conciliation and a power to vary the limit on the unfair dismissal compensatory award.

Business Secretary, Vince Cable, announced during the Bill’s second reading in the House of Commons that additional clauses would also be introduced.

The Bill now looks to introduce the concept of “protected conversations” by inserting section 111A into the Employment Rights Act 1996 (“the ERA 1996”).  The section would provide that in an unfair dismissal claim (brought under section 111 of the ERA 1996) an employment tribunal would not take account of any offers made or discussions held with a view of terminating employment on agreed terms before terminating the employment in question.  It would still be possible to reserve the right to refer to such offers and/or discussions when discussing the issue of cost.

The section would also give employment tribunals the right not to take account of any improper offers and/or discussions where it considers it just to do so.

However, as it stands, offers and/or discussions regarding other claims (including discrimination, breach of contract and automatically unfair dismissal) would not benefit from the protection.

Issues arising with the proposed section 111A of the ERA 1996 include instances where a claimant brings a claim for unfair dismissal (under section 111 of the ERA 1996) along with another claim and whether any offers and/or discussions under such circumstances would be taken into account.  Further, no guidance is provided as to what amounts to improper offers and/or discussions.

The Bill will continue to be scrutinised by the House of Commons before moving on to the House of Lords.

If you have any queries as to how such proposed changes may affect your business, please do not hesitate to contact Catherine Kerr in the Employment team at [email protected] or on 01244 405596.

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