Rogers & Norton News

Compromise Agreements Abolished

Friday, August 16, 2013

An accurate headline – also completely misleading. ‘Compromise agreements’ were renamed ‘settlement agreements’ with effect from 29th July 2013.

You don’t need to do anything, although it’s sensible to change the title at the top of any standard agreements you use.

The government has also introduced something called a ‘confidential pre-termination discussion’. Despite the complex name, it’s a simple concept. From the end of this month, employers are allowed to open discussions with employees about exit packages without that, of itself, carrying the (small) risk of the employee going on to claim constructive dismissal.

Tribunals can no longer be told about such conversations in an unfair or constructive dismissal claim (although, arguably, this protection was already available where there was an existing dispute). However, they can be told about such conversations in other types of claim, such as discrimination (for example, if a pregnant woman alleged she’d been approached with an exit package because she was pregnant). They can also be told about such conversations if the employer has engaged in improper conduct, or placed undue pressure on them to accept the offer. It’s a nice headline grabber for the government, to show how business-friendly it is, but it doesn’t really change much in practice.