This new provision in the Enterprise and Regulatory Reform Bill will allow employers to make an offer of a termination package without the fear of the offer being raised in a later claim. This goes further than the without prejudice rule as there will not need to be an existing dispute. However, this protected conversation provision will only apply to an unfair dismissal claim. Discrimination claims and other claims such as breach of contract will be unaffected by the new rule. The provision may not apply in the case of constructive dismissal.

The Government will publish a consultation later in the Summer on guidance principles for the use of settlement agreements as well as draft letters and model templates.

The Government is also proposing to bring in a compulsory conciliation period before an employee is allowed to start a tribunal claim during which ACAS will help the parties discuss settlement. The latest annual report figures highlight the demand for ACAS’s early dispute resolution service - Pre‑claim Conciliation - which rose by 34% to 23,777 cases in 2011/2012. This conciliation was launched in April 2009 to resolve workplace problems before they led to tribunal claims. Compulsory conciliation will build on this provided ACAS has adequate resources. Unfair dismissal continues to be the most common reason for individual conciliation cases.

There is also power in the Bill to reduce the compensatory award possibly as low as £26,000 compared with the current limit of £72,300, or a specified number of weeks’ pay, whichever is lower.