Enterprise and Regulatory Reform Bill update:Headline news but little detail

We have previously reported the publication of the Enterprise and Regulatory Reform Bill, legislation which proposes various measures to improve resolution of employment disputes and tribunal reform. (see Education HR e-briefing 498).

After the Bill underwent its Second Reading in the House of Commons, the press was awash with stories of significant developments.  Receiving particular attention have been the proposals regarding new-look compromise agreements (or “settlement agreements” as they are to be called) and Government aims to make candid conversations and mutually agreed terms for termination of employment more accessible.  Despite suggestions in the press that the proposals may present a resurrection of no-fault dismissal proposals, the Government has now categorically confirmed it does not intend to proceed with these.

In truth, whilst affirming Government ambitions, the debate did little to clarify what the Bill will mean in practice.  The Government has re-iterated its proposals for greater use of compromise agreements with a view to easing the handling of workplace disputes. In so doing we now know the intention is that:

  • Employers will be able to offer settlement agreements before a formal dispute arises; and
  • Those who do so will be legally protected from this offer being used as evidence in an unfair dismissal tribunal case.

However, settlement agreements should not replace proper performance management and employees can still choose whether to accept an offer. If they do not, the employing education institution will still need to follow a fair process before finally deciding to dismiss the employee.

Despite the headlines, new clauses which will set out how these objectives are to be achieved, such as the form settlement agreements may take and how employee protection will be retained, are not yet available. These are unlikely to be tabled before the Committee stage of the Bill, due to be concluded by mid July. Furthermore, the Government has revealed it plans to consult on the principles of guidance for using settlement agreements, including draft letters and model templates for employers and employees to use.

The progress of the Bill and the direction it is taking at present will be welcomed by some.  However, there is still considerable way to go before the practical implications are clarified and institutions can start to prepare for change. Key questions remain such as:

  • What form settlement agreements should take?
  • How allegations of discrimination will sit with the proposals?
  • Will contemporaneous changes to maximum compensatory awards have for unfair dismissal have particular effect in this context?
  • Can many employers really afford pay offs in the current climate? We will continue to monitor progress and provide updates on each of these issues and others as they arise.