Revised code of practice on settlement conversations takes effect

Posted: 29/07/2013

New rules come into force today which the Government believes will help employers to have discussions with their employees that may lead to a settlement (formerly compromise) agreement being signed.

Conversations are not admissible in employment tribunal proceedings if they are 'without prejudice' but, for this to apply, discussions must be in relation to an existing dispute which can be something of a grey area. The new rules seek to make conversations designed to agree a termination package with an employee inadmissible as evidence at a later employment tribunal hearing, even if they are not 'without prejudice'.

ACAS has published a code on the new rules, which can be found here.

Much has been written about this but the key issues are:

• the 'without prejudice' rule can still apply where there is an existing dispute;
• the protection only applies to claims of unfair dismissal (NOT discrimination);
• the protection does not apply where the claimant is alleging that his or her eventual dismissal was because of an 'automatically unfair' reason (of which there are many), like whistleblowing;
• the protection will not apply to claims of breach of contract (eg wrongful dismissal);
• the protection will only apply to the extent that an employment tribunal considers 'just' if there has been 'improper behaviour' by the employer. There is a non-exhaustive list of examples of such behaviour in the ACAS code. One such example could be not allowing the employee 10 calendar days, as recommended by ACAS, to consider and get advice on the terms of the settlement agreement. Many employers will find this problematic;
• the ACAS code suggests that, whilst it is not a legal requirement, employees should be given the right to be accompanied to settlement conversation discussions. This can also cause practical difficulties and may well be inappropriate in many situations;

As with the now abolished statutory disciplinary and grievance procedures, these rules could form the basis of claims in themselves and need to be used carefully. It should certainly not be an automatic decision to use them or to rely on them in any particular instance.

Also coming into force today are a number of technical tribunal rule changes and, most importantly:

• fees for employment tribunal claims are now payable by claimants (although, as of today, the legality of these charges is subject to a judicial review application by UNISON);
• a cap of 52 weeks’ pay on unfair dismissal compensatory awards (in addition to the existing cap of £74,200) will now apply.

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