The new Enterprise and Regulatory Reform Act re-names compromise agreements "settlement agreements" and, once the relevant provisions come into force, if an employer makes an offer of settlement before a formal dispute has arisen and follows the statutory ACAS Code of Practice, an employee will not be able to give evidence of the offer at any subsequent tribunal hearing.  However, the confidentiality of negotiations is preserved only in relation to an ordinary unfair dismissal claim (so not including automatically unfair dismissals or discrimination claims).

Having consulted on a first draft in February, ACAS has now published a revised Code of Practice.  The new version deals mainly with the confidentiality provisions and, although it does list the requirements for a settlement agreement to be legally valid, it does not now specify how settlement offers should be made, beyond making it clear that, while an initial offer can be made orally, the final agreement must be in writing.  Employees should also be allowed to be accompanied at settlement agreement meetings, even though this is not a statutory requirement.  The template offer letters to employees, included in the previous draft, will now be demoted to non-statutory guidance.

"Improper behaviour" prevents the new non-disclosure rule from applying.  The Code explains that this includes harassment, victimisation, discrimination and putting "undue pressure" on a party.  Only three examples of undue pressure are now included in the Code, although more will be given in non-statutory guidance:

  • An employer not allowing an employee the minimum time to consider the formal written offer – ten calendar days
  • Telling an employee, before any disciplinary process has begun, that he or she will be dismissed if the offer is not accepted
  • For employees, threatening to undermine the employer's reputation (other than by protected whistleblowing) unless the employer agrees to sign.

The new rules and the Code should be in place later this Summer.

The Government has also issued a new timetable of start dates for other parts of the Enterprise Act.  Highlights include:

  • 25 June 2013: changes to the requirements for protected whistleblowing claims
  • July 2013: unfair dismissal compensation award cap
  • "Summer" 2013: employers' vicarious liability for whistleblowing detriment
  • 1 October 2013: directors' remuneration – new reporting and annual voting requirements for quoted companies
  • 6 April 2014: mandatory pre-claim ACAS conciliation; removal of discrimination questionnaire procedure
  • October 2014: compulsory equal pay audits for employers losing equal pay claims.