As you will know from our previous bulletins, the Government has proposed a number of reforms to streamline employment process and to boost employer confidence. On 14 September 2012, Business Secretary Vince Cable provided further details on which proposals were to be given an A* and which proposals were to be sent to detention.

  • Settlement Agreements – it is proposed that compromise agreements will be renamed as "settlement agreements". A statutory ACAS code will also be established which will include:
    • optional model letters – for initiating the settlement process;
    • optional model compromise agreement – with a view to reducing employer drafting costs; and
    • guidance on severance payments.

The intention is that settlement discussions will remain "off the record" so they cannot be relied upon by the employee in the Tribunal. However, that protection will fall away if the discussions are used as a way to discriminate against the employee.

At present, there are no plans to scrap the need for independent legal advice to conclude the agreement.

  • Unfair Dismissal Compensation – consultation has begun on lowering the compensatory award (currently at £72,300). Proposals include a cap of up to 12 months' pay or a new reduced upper limit based on between one and three times median annual earnings (currently £25,882 and £77,646).
  • Tribunal Process – the main plans would see Tribunals given greater powers to dismiss weaker claims and the ability to reduce the number of preliminary hearings.
  • Compensated No Fault Dismissals – these have been ruled out. Instead, the plan is to provide greater guidance around the ACAS code on Disciplinary and Grievance procedures.
  • TUPE – wide ranging feedback is being sought on a number of key areas including whether service provision changes should remain; the date employee liability information must be provided and whether a change of workplace location can constitute an economic, technical or organisational reason.

We are moving slowly but surely towards reform, but when the reforms do eventually come, we do not anticipate that they will be ground breaking.

If you would like some light reading the consultation papers and proposed templates can be found here.