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25th February 2013

ACAS Consults on Code of Practice for Settlement Agreements

In the last few weeks ACAS has launched a public consultation on a draft statutory code of practice which is intended to promote the use of voluntary terminations by way of compromise agreements (which are to be renamed as “settlement agreements” under proposals contained within the Enterprise and Regulatory Reform Bill 2012-13).

Under the provisions of the Enterprise and Regulatory Reform Bill 2012-13, an employer will have more freedom to have a discussion with employees about a proposed voluntary termination where no dispute has yet arisen. Those discussions will not be admissible in an unfair dismissal claim (except automatically unfair dismissals) unless there has been “anything said or done which in the tribunal’s opinion was improper, or was connected with improper behaviour”. If there has been such improper behaviour, the discussions will be inadmissible only to the extent that the tribunal considers just.

The draft code prepared by ACAS contains a brief explanation of the forthcoming new law, some basic guidance on how to offer a voluntary settlement (including template letters) and guidance on what would amount to improper behaviour. The consultation closes on 9 April.

We hope to have further details of the proposed code of practice once the consultation period has ended and ACAS has reported on the responses it has received.

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