Clive Mackintosh, experienced settlement agreement solicitor explores the ACAS Settlement Agreement Code of Practice, a set of guidelines issued by the Advisory, Conciliation and Arbitration Service (ACAS) to assist employers and employees in understanding the law relating to the negotiation of settlement agreements as set out in section 111A of the Employment Rights Act 1996.

These agreements are legally binding contracts that can be used to resolve employment disputes or to end an employment relationship.

This blog post explores the key points of the Code of Practice and the potential risks associated with non-compliance.

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What is the ACAS Settlement Agreement Code of Practice?

The Code of Practice provides guidance on the negotiation and drafting of settlement agreements. It aims to ensure that both parties are aware of their rights and obligations and that the agreement is fair and reasonable.

Key points of the code of practice

Independent legal advice

The Code emphasises the importance of obtaining independent legal advice before signing a settlement agreement. This advice should be provided by a qualified lawyer who is not connected to the employer or the employer's representatives.

Confidentiality

The Code highlights the need for confidentiality in settlement negotiations. It states that discussions and documents related to the settlement should remain confidential, unless disclosure is necessary for legal purposes.

Time for consideration

The Code recommends that employees be given sufficient time to consider the terms of the settlement agreement and to seek independent legal advice. This typically means at least 10 days.

Clarity and fairness

The Code stresses the importance of clear and unambiguous language in settlement agreements. The terms of the agreement should be fair and reasonable, and the employee should understand the implications of signing it.

Risks of non-compliance

Failing to comply with the ACAS Code of Practice can have serious consequences for both employers and employees. Some of the potential risks include:

Invalidity of the agreement

If a settlement agreement is not drafted in accordance with the Code, it may be deemed invalid. This could lead to further legal proceedings and additional costs for the employer.

Financial penalties

Employers who fail to comply with the Code may be subject to financial penalties. These penalties can be significant and can have a negative impact on the employer's bottom line.

Reputational damage

Non-compliance with the Code can damage an employer's reputation. This can lead to negative publicity and difficulty in attracting and retaining employees.

The ACAS Settlement Agreement Code of Practice is an essential tool for an employee considering entering into a settlement agreement. By following the guidelines set out in the Code, the employee and their legal representative can ensure that the employer approaches the negotiation and finalisation of the agreement in a fair, reasonable, and legally compliant way.

For advice on concluding your settlement agreement contact Clive Mackintosh today, call 0330 043 8845, email clive@solicitor.help, or request a call back.