New legislation to help employers avoid liability for unfair dismissal

18th July 2013

Government proposals that will make it easier for employers to manage their workforce, without the worry of reprisals from the Employment Tribunal, are due to be implemented on 29th July 2013.

According to employment solicitor, Adam Pike, two main changes will take effect from this date. This first is that compromise agreements will be renamed “settlement agreements”. The second is that the Employment Rights Act 1996 will be amended to prevent employees, who bring a claim for unfair dismissal, from referring to any negotiations or offers of settlement between them and their employer that took place before the employment relationship ended.

This means that employers will be able to discuss and negotiate settlement proposals with their employees with a view to bringing the employment relationship to an end voluntarily, even where no dispute has yet arisen. If the employee then brings a claim for unfair dismissal they will not be entitled to refer to the pre-termination negotiations, unless it is felt that the employer has acted improperly in the manner in which it has conducted the discussions.

The new legislation does not specifically state what would be considered improper, but the ACAS Code of Practice that is intended to give guidance to employers provides a non-exhaustive list which includes harassment, bullying, intimidation or exerting undue pressure on the employee.

It is therefore advisable for any employer intending to make use of the new provisions, to take some time to read the ACAS Code, or seek legal advice on the best way to proceed.

The ACAS Code has not been finalised yet and is still under review. It was originally envisaged that it would include draft letters to be used by employers when making settlement offers to their employees. However, this was heavily criticised as it was felt that it was too prescriptive and could lead to further litigation. The draft letters are now being reviewed, however it is envisaged that they will be included in the Code in one form or another.

Employers should note that the new legislation only applies to claims brought by their employees for unfair dismissal. If the claims relates to discrimination it is likely that the employee will be able to refer to the pre-termination negotiations that have taken place, and the tribunal could take the employer’s conduct into consideration.

Adam Pike, an employment law specialist with Ansons Solicitors which has offices in Lichfield and Cannock said:

“It is important that employers obtain advice at an early stage in order to identify the relevant issues and potential pitfalls before entering into any pre-termination discussions, or making settlement proposals to their employees.”

If you are an employer and would like advice in relation to the above please call Adam Pike on 01543 431 197 or email