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Civil service settlement agreements cannot be used to avoid disciplinary action

02 February 2015 #Employment

The Cabinet Office has published Cabinet Office Guidance on Settlement Agreements, Special Severance Payments and Confidentiality Clauses on Termination of Employment which will apply from 1 February 2015.

The guidance covers the use of a settlement agreement or COT3 to terminate employment and It applies to all confidentiality clauses regardless of whether they are linked to the termination of employment.

The guidance applies to all civil service organisations and their arms length bodies (ALBs) and covers cases in which public money is being spent on civil servants or non-civil servants employed by government departments or ALBs. ALBs include ministerial departments, non-ministerial departments, executive agencies, Crown non-departmental bodies and non-departmental public bodies. Further detail on the scope of the guidance is set out in Annex B to the guidance.

Using settlement agreements

The guidance states that a settlement agreement should not be used in order to:

  • Avoid taking appropriate performance/attendance management or disciplinary action.

  • Cover up individual or organisational failure.

  • Prevent an employee from speaking out - for example, to mask malpractice.

  • Terminate someone's employment because they have made a protected disclosure under the whistleblowing legislation.

Special severance payments

A special severance payment is a payment made to an employee outside their statutory or contractual entitlement on termination of their employment. Special severance payments are expected to be "rare and exceptional" (A department that is considering making a special severance payment must take legal advice and must be able to demonstrate that any payment is in the public interest and provides value for money.

Confidentiality clauses

Confidentiality clauses should not be used in settlement agreements as a matter of course. In particular, they should not prevent the proper disclosure of matters of public interest such as wrongdoing or poor practice in their current or former workplace. Regardless of whether they are used in a settlement agreement or otherwise, departments should always consider whether each part of a confidentiality clause is required on the facts of the particular case and take legal advice on the use of the clause and the agreement as a whole.

If a confidentiality clause is used, departments must expressly remind the employee of their rights under the Public Interest Disclosure Act 1998.

Approvals process

From 1 February 2015, departments must seek the approval of their minister and then of the Minister for the Cabinet Office for the use of confidentiality clauses in settlement agreements that meet any of the following criteria:

  • The agreement involves any member of the Senior Civil Service.

  • The matter is one of high visibility or is likely to be contentious (at any grade).

  • The agreement concerns a proposed payment of £100,000 or more (at any grade).

  • The confidentiality clause deviates, in respect of whistleblowing or protected disclosures, from the standard wording in Annex A to the guidance (at any grade).

  • Where a dismissal based on disciplinary, performance or attendance issues has been overturned on appeal, but the employer wishes to dismiss in any event (at any grade).

Clarkslegal, specialist Employment lawyers in London, Reading and throughout the Thames Valley.
For further information about this or any other Employment matter please contact Clarkslegal's employment team by email at by telephone 020 7539 8000 (London office), 0118 958 5321 (Reading office) or by completing the form on this page.
This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full General Notices on our website.

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