Wednesday 13 June 2012

Update on Enterprise and Regulatory Reform Bill

The Enterprise and Regulatory Reform Bill received its second reading in the House of Commons yesterday.

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 (see column 65 of Hansard).

Vince Cable also announced that legislation to bring in settlement 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. The government will also publish standard 'settlement agreement' forms for employer and employee to use. It is not clear whether the requirement to obtain legal advice before signing a compromise agreement will be affected. For first-class comment on this proposal, see Darren Newman's blogpost.

Finally, he 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). For an excellent article lambasting this proposed reduction to the compensatory award, see Anya Palmer's article in this week's Solicitors Journal.

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