Settlement agreements - a new way forward

Under new plans unveiled by the government employers may be able to move away from the rigmarole of compromise agreements and move onto a new regime of settlement agreements.

Proposals to use settlement agreements have been included in the Enterprise and Regulatory Reform Bill which is currently at report stage in the House of Commons. If the new rules are approved these agreements will ease the handling of work place disputes by allowing employers to exit employees who don't meet the required standards and help to limit their exposure to unfair dismissal claims.

Employers will be able to offer their employees a settlement offer before any dispute arises and they will be protected against any employee presenting this as evidence in a tribunal as such evidence will be deemed inadmissible.

Employees will continue to benefit from their existing employment rights; it will then be their decision as to whether they reject the settlement agreement and in the event that they are dismissed if they bring a claim to tribunal.

A BIS press release has stressed that settlement agreements are not intended to replace performance management structures that employers have in place. If an employee is unwilling to accept a settlement agreement an employer will still have to follow a fair procedure before they embark on dismissing an employee.

The Government believes that the reforms will help to make it quicker and easier to resolve workplace disputes and help to encourage mutual agreement between employee and employer, limiting the amount of workplace disputes that reach a formal stage.

However, others have raised concerns that presenting an employee with a settlement agreement prior to a dispute arising will undermine the fundamental principle of trust and confidence between employer and employee.

The BIS have announced that a full consultation on these reforms will be published this summer and we will keep you updated with the progress. digg stumbleupon buzzup BlinkList mixx myspace linkedin facebook google yahoo