The Enterprise and Regulatory Reform Bill received its second reading in the House of Commons on 12 June 2012. During the debate, the Secretary of State for Business, Innovation and Skills, Vince Cable announced that the government would not be pursuing Adrian Beecroft’s ‘compensated no fault dismissals’ proposals, which has been much criticised by trade unions and other employee organisations.
Kate Fretten, Employment Partner, says “Vince Cable also announced that legislation to bring in settlement agreements (known currently as ‘compromise agreements’) would be introduced in the Bill at committee stage (19th July).” This will allow employers to make an offer of a termination package without fear of the offer being raised in a tribunal claim. It goes further than the ‘without prejudice’ rule as there will not need to be an existing dispute for the agreements to be effective. It is not clear whether the requirement to obtain legal advice before signing a compromise agreement will be affected.
Finally, Mr Cable defended an attack on the power in the Bill to reduce the compensatory award to the lower figure of an employee’s annual earnings, or national median earnings (£28,000). This Bill, if it goes all the way to becoming legislation, will have a substantial impact on employment law in the near future.
For a free initial meeting please call 01202 499255 and Kate or Paul will be happy to discuss any questions you may have.
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