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Law for Business

Knowhow - guidance - precedents

16 MAY 2013

Settlement Agreements

Pam Loch

Managing Partner


From Summer 2013, the Enterprise and Regulatory Reform Act 2013 changes compromise agreements to ‘settlement agreements'. In addition, as long as an employer complies with the new ACAS Code, evidence of discussions held with a view to entering into a settlement agreement to terminate employment, will be inadmissible in unfair dismissal proceedings. 

The new rules are intended to provide employers and employees with more freedom to hold discussions about an agreed termination of employment and proposed settlement outside the context of an existing dispute (in effect, where the without prejudice rule would not apply). The rule will cover ‘pre-termination negotiations' which will mean ‘any offer made or discussions held, before the termination of the employment in question, with a view to it being terminated on terms agreed between the employer and the employee'.

In reality, the draft Acas Code of Practice is relatively prescriptive and may result in loss of protection if not followed, as the Employment Tribunals and Courts will interpret relevant cases in accordance with the Code. However, employers need to be careful as evidence of the discussions can be used in claims other than unfair dismissal such as discrimination.

Therefore employers will still need to proceed with caution and ensure that anything said in pre-agreement discussions would be acceptable and could be justified if brought before a Tribunal.

Pam Loch, Managing Partner of niche employment law practice, Loch Associates Employment Lawyers and Managing Director of HR Advise Me Limited.

For more information on Loch Associates Employment Lawyers please go to www.lochassociates.co.uk and for HR Advise Me go to www.hradvise.me

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