Settlement agreements put workers between a rock and hard place

Victoria Phillips is head of employment rights at Thompsons Solicitors

The effect of the ACAS consultation on the draft statutory code of practice for settlement agreements is to confirm the importance of trade union membership. With a union to turn to it is unlikely that workers ambushed by employers with a letter giving the choice of an offer of a meeting to discuss their underperformance or money to leave will accept something that is not in their interest.


But for the unrepresented, the risk is they will feel pressurised to do just that.


Although the draft template letter ACAS has produced provides the option of a meeting and the opportunity to improve, the employer wouldn’t be suggesting exit terms if they really wanted to go down that route.


Settlement agreements are not that different from the original “protected conversations” proposed by Tory donor Adrian Beecroft. They allow an employer to make an offer to end an individual’s employment without it being able to be used as evidence should that employee go on to pursue an unfair dismissal claim, as long as there’s been no undue pressure or improper behaviour in the making of it.


There’s no requirement in the employer’s letters, as currently drafted, for including the detail of the issues and, of course, that’s the point of settlement agreements. The government wants to free employers from the hassle of having to explain, in writing, why they think someone needs to pull their socks up or leave.


But unless the employee is told exactly what the concerns are they will be unable to assess risk (especially in just seven working days, the suggested time limit for accepting an offer). Without the buffer of a union to advise them, what are they to do?


And what if the employer simply doesn’t like someone and is trying to bluff them, implying they have something on them when they don’t? It would take a confident person to go in alone and demand the evidence.


Settlement agreements provide a veil of secrecy which will be difficult for all but the well resourced, persistent and union represented claimant to lift. Potentially an application to do so could only be made at a final tribunal hearing, meaning that the parties have to stay the distance and that costs will increase.


Settlement agreements are, in reality, a lever to get rid of perceived problem employees without bothering with due process. Such behaviour will undoubtedly demotivate staff who either receive such a letter, or hear about them being used. These plans are fraught with the risk of unintended consequences.


The consultation paper can be downloaded here

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