Confidential Termination Negotiations

Following a consultation exercise in Autumn 2012, the Department for Business Innovation & Skills (BIS) introduced legislation which, from this Summer, will enable employers and employees to engage in confidential settlement negotiations before termination of employment. As a consequence, both parties should be able to negotiate freely without fear that the anything discussed (such as the value of offers made but declined) may subsequently be raised in any subsequent ordinary unfair dismissal claim at an employment tribunal. Previously, this type of legal privilege only extended to “without prejudice” discussions taking place after a dispute had already arisen.

Sounds good, but what's the catch?

Employment tribunals will have a limited discretion to take into account anything said or done in negotiations which, in the tribunal's opinion, was improper and which it would be unjust to exclude. As such, the protection of the new rules could be lost because of the way pre-termination settlement negotiation are conducted. Also, the protection will only extend to ‘ordinary’ unfair dismissal proceedings, so will not cover claims arising from ‘automatically’ unfair dismissals, such as dismissal for reasons connected with pregnancy, for making a protected disclosure or for participation in trade union activities.

So how do I ensure that pre-termination discussions will be protected?

Following another consultation in February, Acas has published its response document, which includes a revised statutory Code of Practice on Settlement Agreements ("the Code"). A non-statutory guidance document will also be published alongside the Code to aid understanding of the new legal provisions. Failure to follow the Code will not, in itself, make an employer liable to tribunal proceedings. However, employment tribunals will take the Code into account and so compliance will be an important factor when considering whether there has been any improper conduct. In particular, the Code sets out some points of good practice for employers to follow, including:

• as victimisation and harassment;
• allowing employees to be accompanied at settlement agreement discussions;
• template settlement agreements and information on what parties need to so to make settlement agreements legally valid (template letters will also be included in the non-statutory guidance);
• allowing ten calendar days as the minimum time period to consider the formal written offer on which independent advice must be obtained; and
• that while an initial offer may be made orally, the final agreement must be in writing.

Katherine Sadler-Smith, Training & Know-How Lawyer, Osborne Clarke
(Guest Blogger)

Labour Market News

Some positive news on the jobs market today as the Office for National Statistics (ONS) reports that the unemployment rate fell by 5,000 in April. This goes some way to reversing recent rises and suggests an overall steady labour market. However, with recent good news on the economy and the likelihood that economic growth will be shown to have picked up in the 2nd quarter of this year, we may expect unemployment to fall further and the competition for talent to increase over the coming months.

Commenting on today's Labour Market Statistics released by ONS, Mark Beatson, Chief Economist at the CIPD, said: "Today's figures show that employment is increasing again with the number of people in jobs up by 24,000 over the quarter.  However, the general picture is still one of relatively slow progress.  We have seen very modest reductions in unemployment and youth unemployment this month, total hours worked have hardly changed and earnings growth remains very low in historical terms."

Mike Beesley, CEO, RSG