Settlement Agreements: ACAS consultation

ACAS is consulting on a draft statutory code of practice to accompany the provisions on settlement agreements in ERRB (see our January Newsletter Latest Government Changes: Settlement Agreements). As a reminder, the aim of the Code is to give employers confidence that if they make an offer of settlement before a formal dispute has arisen and follow the new Code, an employee will not be able to give evidence of the offer at any subsequent unfair dismissal Tribunal hearing. In this respect the draft Code indicates that:

• the initial settlement offers should be in writing and should include the reason for the offer (the Code includes template offer letters to employees for severance on the grounds of unsatisfactory attendance, performance, and conduct);
• the parties should allow a reasonable time for consideration of the offer – seven working days minimum; and
• employees should be allowed to be accompanied at meetings by colleagues or trade union representatives.

However, in order for that protection to bite, the ERRB provides that there must be no ‘improper’ behaviour by the employer in the process of discussing the agreement. Therefore perhaps the most important function of this ACAS statutory code is to help employers avoid such ‘improper’ behaviour by providing a clear explanation of the law in this regard.

In this respect the draft Code explains what constitutes improper behaviour, including harassment, victimisation, discrimination and putting “undue pressure” on a party. Some examples of undue pressure are given, such as an employer not allowing an employee a minimum of seven working days to consider an offer; reducing the offer during the seven day period; telling an employee he or she will be dismissed if the offer is not accepted; and (for employees) threatening to undermine the organisation’s reputation unless the employer agrees to sign. However, ACAS is concerned to point out that this is very much a first draft and only reflects “the initial view of [the ACAS] Council, and we are anxious to hear what others think”. Views are sought on many aspects of the Code and, in particular, on these examples, whether to include other examples, and whether to give examples of behaviour that would not be regarded as improper. However, the draft code does make clear that what is improper would ultimately be a decision for the Tribunal on the facts of each case.

The consultation paper can be found here. The closing date for responses is 9 April 2013.