Settlement Agreements V Compromise Agreements

Settlement Agreements came into effect on the 29th of July 2013.

From 29 July 2013Compromise Agreements have been replaced by Settlement Agreements.

Settlement Agreements are, on the face of it, the same as Compromise Agreements, albeit with a new name; the same conditions need to be satisfied for them to be legally binding and they have the same effect of terminating the employment relationship whilst compromising an employees’ employment rights.

Settlement Agreements are recognised by statute and they are an exception to the general principle set out in all employment legislation that an individual cannot contract out of their statutory employment rights. They are the only way in which an employee can contract out of their rights under employment law. They enable employees to agree to compromise their own statutory employment rights in return for compensation. The main employment rights most often compromised relate to withdrawing an existing, or subsequently refraining from bringing a claim to an Employment Tribunal and/or the courts.

A Settlement Agreement (formerly known as a Compromise Agreement) is a legally binding contract between an employee and employer which is used to end an employment relationship on agreed terms. In return, the employee generally receives a financial settlement and an agreed form of reference.

In other words, a Settlement Agreement is an agreement which enables an employee and the employer to agree that the employee will not bring a claim to the employment tribunal and/or the courts against the employer about the issues covered in the agreement in return for a compensation payment. Without a Settlement Agreement if the employee and employer end their relationship, the employee has the right to take a case to the employment tribunal and/or courts if there are grounds to do so.

There is a range of scenarios in which Settlement Agreements are used. Settlement Agreements can be used to end an employment relationship on agreed terms. They can also be used to resolve an ongoing workplace dispute. Settlement Agreements are often used to safeguard the interests of both employer (who gain certainty they won’t face a tribunal case on any of the grounds covered by the agreement) and employee (who gets a payment and avoids a dismissal in their employment history).

Settlement Agreements can be proposed by either an employer or an employee and they are voluntary, the parties do not have to agree to them or enter into discussions about them if they do not wish to do so. Equally the parties do not have to accept the terms proposed to them.However,once a valid settlement agreement has been signed, the employee will be unable to make an employment tribunal claim about any type of claim which is listed on the agreement.

Prior to 29th July 2013, Settlement Agreements were known as Compromise Agreements.

In practice, there is little difference between a Compromise Agreement and a Settlement Agreement. The main difference between the two is that Compromise Agreements provided limited protection as the “without prejudice” principle applies only to pre-termination discussions entered into between an employer and an employee where there is an existing employment dispute between the parties. Without prejudice is a common law principle which prevents statements (written or oral) made in a genuine attempt to settle an existing dispute from being put before a court as evidence against the interest of the party which made them.

In other words, in order to benefit from the without prejudice protection there must be an existing employment dispute between the parties before pre-termination discussions take place; without a formal dispute the without prejudice principle does not apply. In fact if no dispute exists pre-termination discussions are not covered by the without prejudice principle and they can be referred to in a subsequent tribunal claim.

Settlement Agreements introduced the concept of “confidential” pre-termination discussions. As stated above, to benefit from the without prejudice protection so that such discussions cannot be used in any subsequent tribunal proceedings, there has to be an existing employment dispute before the discussions take place. Since there are often occasions where either the employer or the employee want to enter into pre-termination discussions where there is no existing dispute, the concept of “confidential” pre-termination discussions have been introduced with the intention of encouraging employers and employees to enter into settlement agreements.

Under the new Settlement Agreements pre-termination discussions where there is no existing dispute are confidential and cannot be used as evidence in unfair dismissal claims. Thus, employers and employees are now able to enter into pre-termination discussions without fear of such discussions being used as evidence in subsequent employment tribunal proceedings, in circumstances where there is not an existing dispute.

Pre-termination discussions/negotiations are defined as “any offer made or discussions held, before the termination of employment in question, with a view to it being terminated on terms agreed between the employer and the employee”. Under the new Settlement Agreements such discussions/negotiations are kept confidential whether there is, or is not, an existing employment dispute, or where one or more of the parties is unaware that there is an employment problem. Furthermore where there is an existing dispute between the employer and employee, both the ‘without prejudice’ and new statutory confidentiality provisions will apply, as the new “confidential” and the existing “without prejudice” rules run concurrently.

To obtain the new “confidential” protection, pre-termination discussions must only be used in circumstances involving a “straight forward” unfair dismissal claim. Pre-termination discussions are not protected if the employee has been dismissed for an automatically unfair reason. Employees are not prevented from bringing claims in relation to ‘automatically unfair’ dismissals, such as for whistleblowing, trade union membership or asserting a statutory right, by virtue of having entered into a Settlement Agreement. The confidentiality provisions also do not apply to grounds other than unfair dismissal, such as claims of discrimination, harassment, victimisation or claims relating to breach of contract.

Furthermore, the “confidential” protection also does not apply where there is “improper behaviour” by one of the parties, in which case the tribunal will allow evidence to the extent that it considers it “just”. Improper behaviour, by either an employer or employee, includes all forms of harassment, bullying and intimidation; physical assault or the threat of physical assault; victimisation; discrimination; and putting undue pressure on a party, which can include not giving an employee sufficient time to consider an offer.

Consequently, in the instances above, an employee can use the contents of pre-termination discussions as evidence to support their claim.

To assist employers, employees and their representatives understand the implications of the changes introduced to the Employment Rights Act (ERA) 1996 in relation to negotiation of settlement agreements; ACAS have produced a Code of Practice on Settlement Agreements (“the Code”). The Code is statutory, but failure to follow it does not entitle an employee to bring a claim for this reason alone.

In order for a Settlement Agreement to be valid it must comply with stringent statutory conditions. There are strict and well-defined requirements to be fulfilled to ensure that a Settlement Agreement is valid. A correctly structured Settlement Agreement will be legally binding on both parties.

The following conditions must be satisfied in order for the Settlement Agreement to be valid. If these conditions are not satisfied then the Settlement Agreement is not legally binding:

·         The agreement must be in writing.

·         The agreement must relate to a particular complaint or proceedings

·         The employee must have received independent legal advice on the terms and effect of the proposed agreement

·         The agreement must identify the adviser

·         The adviser must be covered by a suitable insurance policy. The policy must cover the adviser against the risk of a claim for losses because of the advice that has been given

·         The agreement must state that the applicable statutory conditions regulating the settlement agreement have been met.

The Code requires that employees should be given a reasonable amount of time to consider the proposed conditions of the agreement and specifies a minimum of 10 calendar days unless the parties agree otherwise.


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TUC Claims Unemployment Could Be Twice Official Figure

According to data supplied by the Trades Union Congress, the number of unemployed people in the UK announced by the official statistics is not the actual one. In fact they appear to be almost twice more.

In the announcement of the TUC, an organisation representing the majority of UK trade unions, apart from the 2.56 million people whom the Office for National Statistics said were the only unemployed, there were other 2.26 million more who are economically inactive so they were not counted. The Legal Stop is trying to help by providing high quality employment documents and a free job application form.

“Unemployment may have started to fall in recent months but we are still in the midst of a job crisis,” said the TUC’s general secretary, Frances O’Grady. “The true scale of unemployment is far bigger than official figures suggest, as nearly five million people say they want work today.”

She added that the situation at the labour market was far from the desired one with a further 1.4 million people who needed a full-time job but found no other option but start part-time work with the only aim to earn some money.

In her view the information supplied that there was a drop in unemployment rates was not true. The 46,000 people who were said to have found jobs, have started something with just a few hours and in most cases with zero hour contracts.

However, according to the employment minister, Mark Hoban, the unions were not able to bear the economic growth. He pointed out the fact that the unions were out of touch because they did not welcome even the news about the high rates of employment.



Emphasis On Queue Times Causing Border Staff To Neglect Other Duties

A recent report pointed that the pressure at the UK borders was too high so staff there were made to cut down on searches in order to reduce queues and perform full passport checks.
The pressure had to be lowered during the Olympics last year, when the home secretary Theresa May used to receive current information about the queues every day.

These measures led to cutting queue times and now the Border Force tries to keep this achievement.
Some say these measures are not right because many duties need to be neglected so that the queue time drops. Some of the things missed are searching vehicles for illegal immigrants and checking travelers for contraband.
According to NAO these changes could mean that queues are more important than some aspects of performance which may later turn out to be dangerous.
The home secretary has to be informed about any failure to carry out a full passport check.

If you need any business document templates for the UK, consider dowloading them from our website.
In the words of Labour, the lack of sources was to be blamed for the failings.
Between April 2010 and March 2012, Border Force staff fell from 8,023 to 7,527 but funding will be increased for the next year so the number of staff is planned to reach 8,477.
Margaret Hodge from the public accounts committee commended the Border Force for reducing queuing times at the Olympics, but added: “…it is deeply worrying that this came at the expense of its other responsibilities, particularly customs. The Border Force must be able to check both goods and passengers at the same time – border security cannot be an either/or choice.”
Immigration minister Mark Harper blamed the previous government for many of the current problems.



Number Of Workers Earning Less Than Living Wage On The Rise

Due to figures from think tank only for the last year 20% of the workforce in the UK which is about 4.8m people have claimed they earned below the so-called living wage. This means their number has risen too fast. The Resolution Foundation conducted a research the results of which point out that 25% of women and 15% of men who are employed did not manage to cover their basic needs for living in April 2012. This is the last month the search covered.

Since 2009 the number of employees receiving under the living wage had gone up by 3.4 million.

However, there are many different groups of workers who earn much less than the living wage. The worst results have been accounted for those under the age of 20 who go to work. In 77% of the cases they have received salaries far away from what they had expected. The other risk group is of the people working in restaurants and hotels.

London’s living wage is now £8.55 in London and £7.45 elsewhere.

Matthew Whittaker, report author and senior economist at the Resolution Foundation, said: “For most of the working population real wages have been flat or declining for many years and as a result more and more people have dipped below the level of the living wage.”

He added that all the parties need to think carefully about the proper way which would lead to boost in the rates of pay.In addition may be this should be written into the employment contract.

The answer that came from the government was that they were in fact encouraging all employers to give their workers much more money than the national minimum wage.

The spokesman added:

“Despite being in tough times, this Government is doing absolutely everything it can to help people on low pay with the cost of living.”


Conservatives Looking At Ways To Increase Minimum Wage Payments

Soon the Conservative Party is expected to propose new ways which will lead to an increase of the minimum wage.

Sources that provided this information to BBC Newsnight, claim that the party was trying numerous different methods which would ensure people better wages.

One of the things which most probably be proposed is that companies paying their workers more than the minimum wage gain the possibility to pay lower taxes.

However, the Low Pay Commission insists on harsh and immediate actions. It demands an increase in the minimum wage as soon as possible and does not agree with the idea of lower taxes for businesses.

The government did not in fact like the mentioned approach so it is almost sure it will not come to pass.

The minimum wage is now £6.19 an hour and it is expected to rise to £6.31 in October. In the mean time, you can review our employment documents.

At the same time there will be serious welfare cuts from this autumn so the government wants to be sure people will in fact have the means in order to take care of themselves.

Other resources appeared claiming that minimum wage would not be changed soon but will probably stay at the list of priorities for the next Conservative manifesto.

In the opinion of part of the Conservatives most business bosses would be against such a new policy.

On the other hand, the people who are pro the new policies on the minimum wage said they hoped these would start functioning as soon as possible.

Figures show that the number of people who worked for the minimum wage in 2012 is 1.4 million.



TUC Slams Failure Of Agency Worker Equal Pay Laws

In the opinion of the Union federation the TUC, the UK did not manage to create such laws which to ensure that all agency workers are paid equally. The aim of the current European directive is to ensure that agency workers get the same salaries as full-time staff in case they work for a company for more than 12 weeks. However, this does not function in the way it was planned to.

TUC also said that when agencies directly employed workers they might in fact not receive the same amount of money as those who were employed by the company.

This bothered the TUC and it complained to the European Commission with the statement that such types of contracts needed to be banned because they exploited workers.

General secretary of the Trades Union Congress, Frances O’Grady, said that the regulations which are now functioning changed the situation for better and many agency workers admitted the working conditions had improved and all this happened without any dismissals.

Unfortunately, more and more employers ignore the regulations and appoint workers exactly in the way they should not.

“Most people would be appalled if the person working next to them was paid more for doing the same job, and yet agency workers on these contracts can still be treated unfairly.”

Kevin Green, the chief executive of the Recruitment and Employment Confederation, said to the BBC that the most important thing was the creation of more working places. In his view, regulations should be respected and not changed constantly just because somebody did not like them.


May Announces Plans To Tackle Modern-Day Slavery

An announcement was made by the Home Secretary Theresa May, after which the UK government mentioned it would do everything possible in order to cope with the phenomenon known as modern-day slavery.

Soon the Parliament will vote new laws, the aim of which will be to stop the process of trafficking people into the UK and later making them slaves. I guess there are no employment documents for this.

“It has been a profound shock to discover the extent to which slavery has reappeared in our country,” commented May. “We can and we will eliminate it – providing everyone at every level of society does what they can to help. No man, woman or child should be left to suffer through modern slavery.”

Those known as gangmasters- people who provide many underpaid workers- will no longer be able to serve as ones, after being caught.

These will also have certain limits on their movement and the firms they own.

Another reform will be the appointment of a modern slavery commissioner whose task will be to watch closely if things go as planned.

While talking about the modern-day slavery, May announced that society and politics had to do everything possible in order to set such people free. She added that the number of people used as slaves will be reduced only when the people trafficking them were sent to jail.

One of the basic priorities of the freshly-formed National Crime Agency is to deal with human trafficking.

Labour also supported the future reforms but added these would not be enough so that things got better. However, it is a good beginning.

Care Workers Paid Well Below Minimum Wage

A new report from a think tank pointed out that care workers are not paid in the way they have to be- in fact they receive much below the minimum wage.

This report was prepared by the Resolution Foundation and it said this could be accepted as a “national scandal”.

The figures suggest that one in ten cares gets salary below the minimum. What is claimed at the report is that many care workers take not more than £5 an hour.

Now authorities should think carefully of certain changes they could make in order to change the situation because there are too many employers who break national minimum wage laws.

Going through the diaries describing the work done, investigators found that a typical working day usually runs from 7am to 10pm. The time slots for each visit are about 15 minutes. These visits are paid but there are cases of journeys of more than 20 miles for which the care workers do not receive any money. This is precisely what makes their wages so small.

The minimum wage is now £6.19 but it is expected to rise later on this year and reach £6.31.

Due to the current regulations considering working time, these people have to be paid all travel time not counting the commuting to and from work.

After the calculations of The Resolution Foundation for a year a care worker who worked an average of 35 hours a week for 48 weeks would lose more than £1,600.

Shadow health minister Andrew Gwynne said:

“The poor standard of these jobs is one of the reasons the care sector has become so dependent on cheap migrant labour – many workers don’t know their rights and so don’t speak up.”



British Holidaymakers Fall Victim To Unfamiliar Laws Abroad

Unexpectedly many Britons who wished to spend their holidays abroad but did not made a prior research on the destination they had chosen, turned out to be on the wrong side of the law.

In the words of The Foreign Office the problems which British citizens had overseas were due to the fact that they did not know or did not want to adhere the laws and traditions of these countries. Some of the people were wearing camouflaged clothing, some were feeding pigeons, going to casinos and playing bingo or even chewing gum while being at the public transport.

About 25 percent of the UK citizens, who preferred unknown countries in order to relax, finished their tours at the local arrests of these countries and need to deal with lots of documents after.

Charles Hay, director of consular services, said: “Every year British nationals find themselves on the wrong side of the law unexpectedly, resulting in fines or in some cases arrests or even jail sentences”.

He reminded all the UK citizens that laws are not the same all around the world so when they go out of the UK they had better have this in mind otherwise they could be either fined or sent to jail.

If most of these people took the trouble to research the destination before they went there, they could have avoided them.

Tourists need to know that for example when going to Barcelona they should not go bare-chested or wear a bikini except at the city’s beaches. Laws in Venice forbid people to feed the pigeons.

However, researches show that only one in five people of those who go to foreign countries for their vacations, forget to examine the laws before their holiday.



Maternity Discrimination Hampering Women Returning To Work

A recent research showed that with the years the number of women who take maternity leave and later find out they cannot return to the position they had left, rises.

Every year about 340,000 use the maternity leave and about 14% of them have problems at their working places when they go back, which often lead to their dismissal.

There are many cases in which such women were forced to move to a position with less responsibility.

Besides some of them feel their employers force them to resign.

The Equality Act 2010 prohibits the maternity discrimination at work. Unfortunately the law was changed and now women have to pay £1,200 in order to take their employees to an employment tribunal accusing them of maternity discrimination.

The legal firm Slater and Gordon conducted a survey among 1,000 mothers and their answers showed that almost a quarter were not well grounded with their maternity rights. A half of them shared their role at work was not the same after returning back from maternity leave.

Labour said maternity rights would be among their priorities at the next year’s elections. The shadow secretary Yvette Cooper spoke against the coalition because according to her they were betraying working mothers.

For the Independent she admitted her party would do everything possible in order to struggle with employers who did not manage to perform their legal responsibilities.

She wrote: “It is illegal to treat staff unfairly while on maternity leave. But most women don’t know the law and don’t feel able to challenge. So experienced and skilled women are pushed out of jobs or lose pay when they feel least able to disagree. That’s bad for the economy too”.