Not a day seems to go by at the moment without a further announcement on employment law reform. Adding to the list of imminent employment law reforms, the Government has now announced that the following reforms will come into force on 29 July 2013:-

  • provisions to allow confidential pre-termination negotiations; and
  • 'compromise agreements' will be renamed 'settlement agreements'.

Those of you who are regular readers of my blog will know that these two reforms go hand-in-hand. Whilst the renaming of the compromise agreement is, of itself, unlikely to have particularly wide-reaching consequences for employers or employees, the key to the potential impact of this reform is the introduction of confidential pre-termination negotiations. As previously reported, section 14 of the Enterprise and Regulatory Reform Act 2013 will allow employees and employers to enter into certain confidential, pre-termination negotiations which will be inadmissible in any ordinary unfair dismissal proceedings. The intention is that employers will be able to propose settlement terms to employees without the immediate risk of a constructive unfair dismissal claim or allegations of pre-determined dismissal decisions. Similarly, employees can propose settlement terms to their employer in confidence. Such discussions will be covered by this new confidentiality provision, provided the discussions take place with a view to terminating the employee's employment on agreed terms.

However, the protection afforded by confidential pre-termination negotiations is conditional. Pre-termination negotiations will be admissible in unfair dismissal proceedings if there has been "improper behaviour" by either party. In addition, it is worth remembering that this confidentiality provision only applies to ordinary unfair dismissal proceedings. Such discussions will therefore continue to be potentially admissible in automatically unfair dismissal; breach of contract; or discrimination cases albeit the usual "without prejudice" rules will still apply.

I previously reported that, in order to assist with the implementation of this reform for both employers and employees alike, the Government is introducing a new ACAS Statutory Code of Practice on Settlement Agreements. The Code gives guidance on how to handle pre-termination negotiations and includes a non-exhaustive list of what constitutes "improper behaviour". The list includes all forms of harassment, bullying and intimidation; physical assault or the threat of physical assault and other criminal behaviour; all forms of victimisation; discrimination because of age, sex, race, disability, sexual orientation, religion or belief, transgender, pregnancy and maternity and marriage or civil partnership; and putting undue pressure on a party to accept an offer. For my analysis of the ACAS Code, click here. You can also find a copy of the full Code here.

It certainly looks like 29 July 2013 is shaping up to be a pivotal date for employment law reform.