27 September 2012 #Employment
On 14 September Vince Cable announced the ending of the employment relationship consultation which covers ways to encourage the use of compromise agreements, to be renamed “settlement agreements”, as a way for parties reaching mutual agreement where the employment relationship has broken down
The consultation, which closes on 23 November 2012, has sought views on proposals that aim to allow both parties to avoid tribunal costs and stresses involved. The consultation paper acknowledges
“...that it is already common practice for employers and employees to enter into a compromise agreement whereby the employee leaves the employment, receiving some level of compensatory payment in return for a waiver of their rights to bring employment tribunal claims”.
However the paper highlights that there are limitations to compromise agreements and the protections that currently exist for both employer and employee. The Government is therefore seeking to introduce measures to promote them.
The proposals which the consultation document seeks views on are:
The aims of the proposals are to:
While the foreword to the consultation does acknowledge that the Government should not interfere in individual employment relationships, the proposed management of settlement agreements through a statutory code with template letters and agreements does appear at odds with the Government’s statement it does not want to create "an over-engineered process which ties up the parties in red tape".
As noted above the Government’s view is that this will provide confidence to employers with the consultation suggesting some employers could still prefer agreements drafted by their lawyers.