Settlement agreements are in, no fault dismissals are out!

And so – the Enterprise and Regulatory Reform Bill has had a second reading in the House of Commons. Vince Cable announced that the government will not be pursuing Adrian Beecroft’s ‘compensated no fault dismissals’  proposals.

Over 60 MP’s had signed had a motion calling on the government to drop it, as the move would have created “huge insecurity” for millions of employees. Last month, Cable said ‘The last thing employees want is the dead hand of fear hanging over them losing their jobs.’

Legislation to bring in settlement agreements will be introduced in the Bill that will allow employers to offer a termination package without fear of the offer being raised in a tribunal claim. This goes further than the ‘without prejudice’ rule – as there will not need to be an existing dispute.

The government will also publish standard ‘settlement agreement’ forms for employer and employee to use. It is not yet clear whether the requirement to obtain legal advice before signing a compromise agreement will be affected.

Watch this space for our further analysis, or speak to Debbie Francis – Head of Employment at Lawspeed.

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