Several key changes to UK employment law are coming into force this summer.

New settlement agreements replace compromise agreements Compromise agreements are currently used by employers to document termination arrangements with departing employees. Crucially, they include a provision ensuring that the employee waives all rights to bring a claim against the employer. This will generally be in return for an ex gratia payment from the employer. They are the only method of ensuring that an employee validly compromises all statutory and contractual claims which he or she may have against the employer. From 29 July 2013, compromise agreements will be renamed “settlement agreements”. This is a change in name only and will not affect the contents of the agreements or the validity of existing compromise agreements.

Additionally on 29 July, a new regime will come into effect enabling employers to undertake “pre-termination negotiations” secure in the knowledge that these negotiations will not be admissible as evidence in a tribunal in unfair dismissal proceedings. The current legal position is that discussions regarding a potential termination of employment are only inadmissible in litigation where there is an existing dispute. The Government’s view is that employers are not always clear at what point a dispute has arisen and, therefore, when they may initiate “without prejudice” discussions regarding termination which are properly inadmissible in litigation. The new regime aims to make it easier for both employers and employees to have off-the-record discussions about termination without concerns that they could be admitted as evidence in an unfair dismissal claim. The existing common law “without prejudice” rules will continue to run alongside the new statutory regime.