Acas has published a revised draft statutory Code of Practice to accompany the provisions on settlement agreements in S.111A of the Employment Rights Act 1996. This new section was inserted by S.14 of the Enterprise and Regulatory Reform Act 2013 and provides that settlement offers cannot be used as evidence in employment tribunals in unfair dismissal cases, provided there has been no improper behaviour in the process of discussing the agreement.
The Acas Code of Practice is intended to provide a clear explanation of the law relating to this new form of inadmissibility when negotiating settlement agreements. As a result of its consultation, which we reported in our news story of 12 February, Acas has decided to:
- restrict the focus of the Code mainly to the new admissibility provisions set out in S.111A of the ERA rather than settlement agreements generally. The Code’s title has been amended to make this clear
- include information on what parties must do to make a settlement agreement legally valid
- not specify how settlement offers should be made so that the Code does not become inflexible. However, the Code will make clear that, while an initial offer may be made orally, the final agreement must be in writing
- specify ten calendar days as the minimum time period to consider the formal written offer on which independent advice must be obtained
- include a reference in the Code to allowing employees to be accompanied at settlement agreement discussions. However, the Code recognises that there is no statutory right to accompaniment in settlement agreement discussions
- make clear in the Code that what is currently regarded as ‘unambiguous impropriety’ in ‘without prejudice’ cases would also be regarded as improper behaviour in settlement agreement discussions. The ‘illustrative’ list of what constitutes improper behaviour has also been expanded to include all forms of victimisation and harassment. However, Acas will not include an extensive list of behaviours that would not be regarded as improper, although it may provide further detail on this point in the accompanying non-statutory guidance
- ensure that the non-statutory guidance contains advice on the interaction between settlement agreements and other workplace procedures; the tax and National Insurance implications of settlement agreements; how settlement agreements can be negotiated; and worked-up scenarios to illustrate improper behaviour, and
- set out template letters in the non-statutory guidance rather than in the statutory Code.
Ministers have given their approval to the draft Code, which was laid in both Houses of Parliament on 13 May. The Government has indicated that it will bring the new Code, and the new provisions on settlement agreements, into effect in Summer 2013.
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