Following recent changes to the legislation it will be easier for employers and employees to discuss a possible termination package without fear of those discussions being used in a court or tribunal as evidence. Prior to the change in the legislation on 29 July, 2013 “without prejudice” discussions could only remain confidential from the court if there was an existing dispute between the parties.
The new law permits both parties to offer and discuss settlement terms even where no employment dispute exists in the knowledge that their conversations cannot be used in any subsequent unfair dismissal claim. But employers should be aware that if any of their conversations relate to automatically unfair reasons for dismissal such as whistleblowing or relate to claims of discrimination, harassment, victimisation or other behaviour prohibited by the Equalities Act 2010 or claims relating to breach of contract or wrongful dismissal, then those conversations will not be protected.

Richard Moon of Blythe Liggins Employment Law Unit says:
“I can see employers using the new law where there is a poorly performing employee and they wish to offer a deal rather than having to go through a lengthy disciplinary process”

There are additional provisions to make sure that the employer is not behaving improperly towards the employee in relation to the settlement agreement negotiations or offer. ACAS recommend a minimum period of 10 calendar days for the employee to consider the proposed settlement terms and received independent advice. Any terms must be recorded in a formal agreement. This was previously known as a compromise agreement that has been renamed a settlement agreement under the new law.

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