Wisbech-based solicitors Bowser Ollard & Bentley is advising employers of forthcoming changes to the law designed to reduce the number of workplace disputes which reach the employment tribunal stage.
The Government’s Enterprise and Regulatory Reform Bill is expected to receive Royal Assent this spring, meaning that it will become law. A key aspect of the Bill is the introduction of settlement agreements.
Designed to be a simplified version of the existing compromise agreements used by larger employers, settlement agreements are legally binding agreements between an employer and an employee, which can be used to resolve any employment claims that the employee could bring before a formal dispute arises. They go further than the “without prejudice” principle, as they apply even where no formal dispute has yet arisen.
Settlement agreements would end the employment relationship and would usually include a severance payment to the individual by the employer, in return for the employee not pursuing a claim arising out of their employment. The employee would continue to benefit from their employment rights and could choose to reject the offer of a settlement agreement and opt to issue legal proceedings.
Other measures in the Bill include which are subject to parliamentary approval, are introduction of an individual cap on compensation of 12 months’ pay of the employee concerned, which will apply where this amount is less than the statutory limit. The Government response states that it anticipates that the change to the unfair dismissal compensatory award will come into effect in summer 2013.
Giuseppe Pingerna at Bowser Ollard & Bentley, said: “The Government hopes that such agreements will boost economic growth by encouraging employers to take on staff, knowing that any problems which may occur could be resolved without the need to go to a tribunal.
“The changes are expected to become law this spring, so employers should seek legal advice as soon as possible to ensure that their business is compliant.”
For details contact Giuseppe on 01945 583194.