9. SETTLEMENT

In its 2012 consultation, Ending the employment relationship, the government revealed plans to make it easier, cheaper and faster for employers to dismiss workers and resolve tribunal claims.

Firstly, guidance on settling workplace issues is to be published. Specifically, the government intends that there will be a new statutory Code of Practice detailing how a settlement agreement (the new term for a compromise agreement) can be reached.

The Code will require that the terms of the settlement offer be written out; that the reason for being offered the settlement be made clear; and that the employee be given a reasonable period of time in which to respond.

The government also plans to introduce some model documents — standard letters designed for use in making a settlement offer and a model settlement agreement. However, it will not be compulsory for parties to use these documents.

The government’s model settlement agreement requires employees to withdraw their tribunal claim before being paid their tribunal award (clause 4.2); makes the employee rather than the employer liable for any tax that is due on the settlement payment (clause 5.2); and requires the employee to keep the terms of the settlement confidential (clause 8.2).

Further information is available at: www.bis.gov.uk/assets/biscore/employment-matters/docs/e/12-1037-ending-the-employment-relationship-consultation.pdf