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23rd August 2013

ACAS Publishes Guide to Settlement Agreements

The Advisory, Conciliation and Arbitration Service (ACAS) has recently published a new booklet, (“Settlement Agreements: A Guide”), which provides guidance on offering and negotiating a mutually-agreed termination of employment. It includes a template settlement agreement and two template letters for opening negotiations.

The guide has been designed to help employers and employees understand what settlement agreements are, when they might be used and how they can be negotiated. It deals with the practicalities of offering, negotiating and concluding settlement agreements, as well as explaining the new law on when such offers or negotiations may be admissible as evidence in unfair dismissal claims.

The guide has been produced in response to section 14 of the Enterprise and Regulatory Reform Act 2013, which added a new section 111A into the Employment Rights Act 1996 on 29 July 2013 to prevent “pre-termination negotiations” from being referred to in evidence in any subsequent ordinary unfair dismissal case.  The intention of the new statutory provisions is to give employers more confidence to initiate discussions with employees about a proposed voluntary termination on terms to be agreed, where the without prejudice rule would not apply because no dispute has yet arisen. The discussions will not be admissible unless there has been “improper behaviour” by either party.

In June 2013 ACAS previously published a brief Code of Practice on Settlement Agreements which provides information on the concept of “improper behaviour”, and which Employment Tribunals are obliged to take it into account where relevant.

Copies of both the Guide and the Code of Practice are available to download from the ACAS website at:

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