Termination of Employment: Pre-Termination Negotiations – another ERRA reform

The principle behind the introduction of Pre-Termination Negotiations (PTNs), another law change introduced under the Enterprise and Regulatory Reform Act 2013, is to make it easier for employer and employee to have an off the record discussion about termination of employment on agreed terms.

Such a discussion may anticipate a proposal to enter into a Settlement Agreement, as we must now call what was for many years a Compromise Agreement.

Interestingly, there is no need for there to have been a pre-existing dispute before the PTN discussion is held. On the face of it, the employer only needs to refrain from “improper behaviour” in this setting, to avoid losing the PTN’s protection.

But it may not be that straightforward. The employee might immediately assert that the whole conversation is a breach of trust and confidence, walk out and claim constructive dismissal and breach of contract – and evidence of the PTN would then be admissible. Likewise if the employee stopped the discussion in midstream, invoked a protected characteristic under the Equality Act regime (race, sex, age, disability, orientation, religion) and then argued “hidden agenda” via a discrimination claim. Or if the employee turned the offer down, and then asserted after his dismissal that he had been sacked for whistleblowing.

Theory, of course, may differ from practice. An employee invited to participate in such an off the record discussion may know full well that the writing has been on the wall for some time, and look straight away at the financial terms. But the need for employers to tread carefully here is never going to go away.

Employment Tribunal Fees; Compromise Agreements renamed Settlement Agreements

With effect from 29th July, it will be necessary in most cases for a claimant to pay fees when issuing a claim in the employment tribunal and when a claim is listed for a hearing. The exceptions will call for the claimant to complete a remission application and to satisfy a means test.

The fees in mainstream claims are £250 to issue the claim and £950 for the hearing. Lesser claims for defined sums such as wages arrears will involve reduced fees of £160 and £250 respectively. It is expected to be the case that successful claimants will be allowed to recover their fees from the respondent employer, but this is not mandatory.

It will remain to be seen whether the introduction of fees will serve to reduce the number of claims.

On the same date, Compromise Agreements were renamed “Settlement Agreements”. We may ask why the Compromise Agreement, the long established means of bringing about a clean break to the employment relationship, had to lose its identity at the whim of a politician when there was no call for any such change. However, the clock will not now be turned back, so the age of the Settlement Agreement is now upon us. It may be fair to conclude that we will still hear of Compromise Agreements for some time yet.