Employment tribunal reforms announced

14 Sep 2012

The Business Secretary, Vince Cable, has today announced the start of consultation into certain reforms to the Employment Tribunals.

Those of you who have seen or read any of the news coverage of this announcement might, however, be forgiven for thinking it all sounded a little bit familiar.

The news coverage has, predominantly, focussed on two things: 

  • the proposal to reduce the statutory cap on compensation to be awarded in Employment Tribunals; and
  • the introduction of settlement agreements.

The BBC website, along with many other news provides, described a settlement agreement as being a document "in which staff agree to leave without being able to go to a tribunal, but get a pay-off in return."

As any eagle-eyed employment lawyer or HR adviser will tell you, that sounds very much like a compromise agreement, which has been a mainstay of employment for many years.

In fact what is being proposed is that the definition of "without prejudice" be relaxed in straightforward dismissals, so that employers can seek to negotiate "settlement agreements" (the only difference is the name) without those negotiations being referred to in Tribunal proceedings. 

Under the proposals, negotiations which stray into discrimination will still be admissible, as is the case now.

The main intention of the proposal is to give a little more peace of mind to the employer who wants to sit an employee down and give them a choice between a dignified departure or a protracted performance improvement programme.

We will be examining the proposals in more detail in next month’s Know-How newsletter; however, if you have any questions or comments in the meantime, we’d love to hear from you.