One of the major employment reforms heralded in the Enterprise and Regulatory Reform Act 2013 is a provision allowing employers and employees to enter into confidential discussions about the termination of employment, prior to any dispute having arisen, without the fear that those discussions will be admissible in any later employment tribunal claim. The recently published Acas Code of Practice on settlement agreements is designed to help understand the law when the provision comes into force later this summer (no specific date has been announced).

The Code is short and only applies to these confidential settlement agreements, so does not cover settlements generally. The new law offers limited protection from admissibility in tribunal proceedings. Where there is “improper behaviour” in relation to the settlement agreement discussions, evidence on negotiations will be admissible unless the tribunal considers it just to exclude it.

There is one significant change to the way many employers currently handle termination negotiations. The Code suggests that employers should allow employees to be accompanied at the negotiation meeting by a work colleague, trade union official or trade union representative. Although the Code expressly recognises that this is not a legal requirement it states that “allowing the individual to be accompanied is good practice and may help to progress settlement discussions”. For many employers opening up delicate negotiations in front of a third party will be a significant change. Another interesting change is that the Code sets down a general rule that a minimum of ten calendar days should be allowed to consider the proposed formal written terms of a settlement agreement and to receive independent legal advice.

An original suggestion was that the Code should also include standard template letters but these and other issues (such as guidance on the interaction between settlement agreements and other workplace procedures) are now to be left to non statutory guidance which will be published later.

The Code is a statutory code. This means that failure to follow the Code does not in itself make a person or organisation liable to proceedings - but employment tribunals will take the Code into account when considering relevant cases.

Although the introduction of this “confidential” provision has been headline grabbing, its scope is quite narrow. It only applies to unfair dismissal claims so negotiations relating for example to discrimination or breach of contract are not covered. Claims that relate to automatically unfair reasons for dismissal (such as whistle blowing or union membership) are also not covered. These provisions, however, run alongside the existing without prejudice principle. Discussions need to be carefully planned and handled if they are to attract the without prejudice privilege and advice should be sought.

Please click here to access the Code.