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Government announces the proposed introduction of settlement agreements for dismissal

12 June 2012 #Employment

Late yesterday evening at the second reading of the Enterprise and Regulatory Reform Bill, the Government announced plans to introduce "settlement agreements" for all employers. The aim is to make it easier for small employers to offer employees a financial incentive to leave voluntarily before a formal dispute arises. Further, any settlement offers or agreements cannot be as used as evidence at an employment tribunal against an employer. This should facilitate discussions between employers and their employees without legal action being triggered.

The idea is being promoted by Norman Lamb, employment relations minister and a former employment lawyer. He believes employers should have the option of using a new simpler route to ending employment and the move will make employers more confident of using the agreements.

Settlement agreements are to be a simplified version of compromise agreements, already in use by larger employers, and the Government hopes that their introduction will encourage more employers, particularly smaller ones, to use them. They will come with additional guidance on how to draft and it is intended that there use will lead to less employment tribunal claims.

A consultation on the principles of guidance for using settlement agreements will be published in the summer, and will include draft letters and model templates for employers and employees to use.

Employmentbuddy will keep the blog updated when the outcome of the consultation is published and as the Bill progresses through Parliament.


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