Cable Announces Workplace Dispute Settlement Agreements

Business Secretary Vince Cable has announced a new measure to make the handling of workplace disputes quicker and simpler, as part of the proposed Enterprise Bill.

Under the new measures, employers will be able to offer settlement agreements before a formal dispute arises and will be legally protected from this offer being used as evidence in an unfair dismissal tribunal case.

Employees will continue to enjoy full protection of their employment rights, as they can choose to reject the offer of a settlement agreement and proceed to a tribunal.

Vince Cable said:

“Settlement agreements are smart, fair and pro-business reforms which deliver results for employees and employers. It empowers employers by enabling them to keep their workforce flexible and encouraging alternative ways of solving workplace problems rather than resorting to a tribunal. But crucially it does so in a way that keeps the necessary protections for employees in place.”

He added:

“Making this approach simple to use will encourage employers to take on staff in the knowledge that there is an effective mechanism for dealing with serious problems if they occur. We have spent time ensuring we have got this measure right and I truly believe this a smart confidence boosting measure for business.”

The new measures allow employers to tackle unsatisfactory employees without incurring legal costs. Employment Relations Minister Norman Lamb said:

“There are inevitably occasions when the employment relationship doesn’t work out. Employers have to feel confident in dealing with situations such as where an employee isn’t pulling their weight or where someone is unreliable or even guilty of misconduct. In these instances it is sometimes in the best interests of both employee and employer to end the relationship speedily by reaching a settlement.”

The new measure is being presented as a positive step forward for both employers and employees. Norman Lamb said:

“An employee leaving by agreement can do so with their dignity intact. The employer secures peace of mind knowing that they will not face expensive tribunal proceedings.”

He adds:

“We know that many large companies use settlement agreements in this type of situation but we want to ensure that all employers — large and small — can make use of them without incurring large legal fees.”

A consultation will be published this summer on the principles of guidance for using settlement agreements, including draft letters and model templates for employers and employees to use. The Bill continues its passage through Parliament.

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