Followers of UK employment law (and this blog) will already be well aware of the Government’s current mission to “cut red tape” in the employment field. Unfortunately, while the Government has been good at thinking up headline grabbing “initiatives” to do this, its recent proposals have often lacked key detail or substance or have even been actively counterproductive.
As a case in point, it has been announced this week that Business Secretary Vince Cable will add “settlement agreements” to the Enterprise and Regulatory Reform Bill. The purpose of such settlement agreements: to allow employers to offer their employees settlement packages, which (if accepted) would terminate employment and resolve any resulting claims.
Surely employers can already offer such settlement agreements in this context? Indeed so, except that currently such agreements are called “compromise agreements”. So, Mr Cable, how will the new settlement agreements be different?
We are told that settlement agreements will be “simpler”, but not in what respect. We are also told that employers would be able to offer settlement agreements without worrying that an employee would embarrassingly refer to the offer during Tribunal proceedings. Mr Cable concludes that settlement agreements are therefore “smart, fair and pro-business reforms which deliver results for employees and employers.” Yes, but how?
Mr Cable has given no explanation as to what is meant by “simpler” (perhaps the word “compromise” is deemed too highbrow in some Government circles?). Some have speculated that “simpler” will mean the introduction of a prescribed form for settling claims. The question is whether such a form would allow both employers and employees to introduce more complex terms whose protection they would normally want (and therefore would prescribed forms really make the settlement process simpler?).
It is also not clear how employers offering settlement agreements would be any more protected from uncomfortable evidence before a Tribunal than they currently are when using compromise agreements in place of fair dismissal procedures. Employers can already rely on without prejudice privilege to cover such settlement offers (assuming the settlement offer relates to an ongoing dispute). The Government is yet to explain how its current proposals differ from this or what would stop an employee relying on a “settlement offer” to support a claim of constructive dismissal or what the risk is that employers will be faced with increasingly complex litigation as Tribunals try to determine whether a particular settlement offer can be referred to in evidence or not.
No doubt, like most politicians, Mr Cable is keen to appear to be helping business (not least given his title “Business Secretary”). It may be that this week’s announcement (and its lack in detail) should be seen in this context, with the proposal for settlement agreements being just another way of avoiding the point where any of these proposals (especially the “protected conversation” concept) have to be drafted into actual black and white statute law.
