Government announces ‘settlement agreements’ as a means of easing workplace disputes
The Government has confirmed the introduction of ‘settlement agreements’ as a means of speeding up workplace dispute resolution, whereby employees can be encouraged by their employers to leave in exchange for an agreed pay-off – news which is sure to be of interest to the clients of our employment law services here at Employee Management Ltd (http://www.employeemanagement.co.uk).
In unveiling the plans at the second reading of the Enterprise and Regulatory Reform Bill, business secretary Vince Cable made clear that they would incorporate legal protection for employers from employees using such offers as evidence in unfair dismissal employment tribunals. Employees’ employment rights would also remain fully protected, however, with the option still being there for them to reject a settlement agreement in favour of a tribunal.
Cable hailed the proposals as “smart, fair and pro-business”, adding that they would allow for greater workforce flexibility and “encourage employers to take on staff in the knowledge that there is an effective mechanism for dealing with serious problems if they occur.”
He was backed by employment minister and former employment lawyer Norman Lamb, who added that “we know that many large companies use settlement agreements in this type of situation but we want to ensure that all employers – large and small – can make use of them without incurring large legal fees”.
The settlement agreement offer could come in the form of a letter to the employee with details on the kind of payment that could be expected. With or without such a swift and convenient dispute resolution procedure, employers will still be expected to exercise good performance management, and in the event that the employee does not accept, a fair process will still need to be followed before any decision to dismiss the employee is made.
Indeed, while the CIPD welcomed the reforms, describing them as a “definite improvement on the blunt weapon of compensated no-fault dismissal proposed by Adrian Beecroft”, they warned that “an employer’s first point of call shouldn’t be to stick a compromise agreement on the table and show staff the door if an employee’s ‘face doesn’t fit’”.
Some critics have even gone as far as to suggest that the proposal amounts to no more than a name change from compromise agreements to settlement agreements. However, the plan has also attracted acclaim from employers’ groups, with the British Chamber of Commerce, stating that it would “offer many employers the certainty and security they crave”.
To find out more about how you can comply with the new legislation as an employer once it comes into force, simply contact our informed HR consultants at http://www.employeemanagement.co.uk.
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