Vince Cable set to announce new ‘settlement agreement’ legislation

11th June 2012

Vince Cable, today, is set to make an announcement regarding ‘settlement agreements’ which will allow companies to get rid of under performing employees without the risk of being taken to an employment tribunal. This has come about following the Beecroft Report (and subsequent Enterprise and Regulatory Reform Bill) commissioned by the Conservative Government to encourage businesses to take on more staff and grow.

As things stand with current employment law, an employer is able to approach an employee with a ‘compromise agreement’. They are only really able to do this if there is an existing dispute between employee and employer. If they simply present and employee with a compromise agreement with the reason that things are working out and they are no longer required within the business, they could open themselves up to constructive dismissal claims, based on the fact that as soon as this is said the employer/employee relationship could be seen as to have broken down and all trust between the two parties to be gone.

The one major change with a ‘settlement agreement’ (apart from the obvious name change), is that the employer will be able to approach and under performing employee with the agreement without the risk of being taken to tribunal. There is no obligation for the employee to accept the agreement, but under the new law they will not able to use this as a claim against the employer.

To read more on this please see the following links:

Vince Cable plans ‘settlement agreements’ for firms to axe staff

You also read more about compromise agreements here.


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