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Protected Conversations & Compromise Agreements: What Employers Should Know

The Department for Business, Industry and Skills (BIS) has launched a consultation “Ending the Employment Relationship” on proposals designed to encourage the greater use of compromise agreements, to enable an employment relationship to be ended on agreed terms. The Enterprise and Regulatory Reform Bill includes provisions which rename compromise agreements as “settlement agreements”. 

It also contains provisions designed to give employers more freedom to have “protected conversations”: that is, discussions with an employee about a proposed termination package with no need for there to be an existing dispute (thus including situations where the without prejudice rule would not apply), and not to have those conversations used in evidence for a future ordinary unfair dismissal claim. The consultation seeks views on proposals for:

  • a statutory Acas Code of Practice on settlement agreements, to include an optional model settlement agreement, guidance notes and model letters that employers can use to propose settlement; and
  • a guideline tariff to help parties set the level of the severance payment.

It is proposed that the Code of Practice will provide further details about how the “protected conversation” regime is expected to operate. In particular, that it will give examples of “improper” behaviour (which in turn renders the conversation disclosable in proceedings) and make it clear that no undue pressure may be placed upon the employee to accept a settlement offer.

The consultation is available here:

Responses should be sent by 23 November 2012.

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