Get in touch 0117 325 0526

Government reforms: (3) Settlement agreements & the final ACAS code

settlement agreementACAS has this month published the final “Code of Practice on Settlement Agreements” and its response to the Government’s consultation on settlement agreements. These are available here. The Code is awaiting Government approval, which can be expected shortly. There will also be non-statutory guidance from ACAS accompanying the Code, which has not yet been published but which we can expect to contain further best practice guidance, template offer letters and a model settlement agreement.

This final Code will accompany the introduction of settlement agreements and discussions which are due to come into force this Summer (see above: Government Reforms: (1) Updated timetable). This final version is fairly similar to the one attached to the consultation paper, which we reviewed in our February 2013 newsletter, Settlement Agreements: ACAS consultation. However, it has the following important differences:

The above definition of ‘improper behaviour’ is of particular relevance as settlement offers and agreements will be admissible as evidence in unfair dismissal claims if the Tribunal decides that anything said or done by the employer in the course of such discussions was “improper”. Therefore if employers are intending to rely on the protection that settlement agreements afford they need to be sure they have not acted improperly. Indeed, one of the reasons ACAS was asked to produce a Code of Practice was to allay concerns about the uncertainty caused by the reference to ‘improper behaviour’. The risk being that, if employers remain unclear as to the scope of improper behaviour, they will shun confidential negotiations. Despite the Code being finalised, that uncertainty will remain as, ultimately, it is up to Tribunals to decide what constitutes ‘improper behaviour’. Nevertheless, the Code will be influential and it will, therefore, be important for any employers considering taking advantage of the new legislation to consider it carefully.

Comment: The Code will no doubt prove helpful in the context of complying with the new rules on settlement agreements and discussions, particularly by helping employers avoid ‘improper’ behaviour. However, as we explained in our May newsletter, Government reforms: finalised, settlement offers are still only to be excluded from disclosure in unfair dismissal proceedings. Therefore our view remains that the use of these agreements will be limited. Why not, when paying settlement money to an employee, cover off all claims and use a compromise agreement and ACAS pre-claim COT3 settlement instead? These will still be available to you.

Share this...

Review Solicitiors