Government announces further progress on Employment Law Review

Unfair dismissal, settlement agreements, conciliation and TUPE regulations were all on the agenda today, following a statement from Jo Swinson, Minister for Employment Relations and Consumer Affairs.

The Government’s Employment Law Review is looking at the legislation which affects the relationship between the employer and the employee. Today it published its response to the consultation on “Ending the Employment Relationship”, and also launched three further consultations (some with very tight deadlines for responses) on Early Conciliation, improving TUPE regulations and reforming the regulatory framework for employment agencies.

Settlement Agreements

The Government believes that Settlement Agreements (formerly Compromise Agreements) offer a “dignified, consensual and mutually beneficial way” of parting company from an employer. ACAS will be asked to published a Statutory Code of Practice for Settlement Agreements, which will include template letters for starting the discussion as well as a full explanation and definition of “improper behaviour”. Substantive practical advice as well as guidance on good practice for employers will be introduced in order to make Settlement Agreements a straightforward solution for both employees and employers.

Unfair Dismissal Cap

A cap will be introduced on the compensatory award for unfair dismissal, equivalent to 12 months’ pay, subject to Parliamentary process. The pay cap will run parallel with a specified overall cap, with the limit the lower of these two figures. A consensus has not yet been reached through the consultation on whether the overall cap should be altered – ergo the Government is not going to pursue a change to the overall cap at this time.

Early Conciliation

In the Government’s Response to the consultation on “Resolving Workplace Disputes”, it made clear its intention to bring in an “Early Conciliation” process. This would make it obligatory for any prospective claimant to send details of their claim to ACAS before they can lodge a claim with an employment tribunal. The theory being that ACAS would be able to resolve the dispute without the need to pursue a claim through the tribunal system.


A consultation will also be launched on proposed changes to the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE). The TUPE legislation protects employee rights when the business for which they work transfers to a new employer. The Government has concerns that the benefits intended from service provision changes made in 2006 have not been that effective. It feels there is “scope to improve the regulations” and are consulting on a range of proposals to simplify the transfer process.

Employment Agencies

Finally, a consultation will also be launched on simplifying the regulatory framework for employment agencies and employment businesses, which are critical to the economy but which is burdened with complicated legislation.

The Government wants to reform the recruitment sector, ensuring that protections are in place for job-seekers, and that any unnecessary red tape is removed.