UK: Employers should update their precedent compromise agreements with effect from 29 July 2013

On 29 July 2013 statutory compromise agreements needed to waive statutory employment claims will be renamed "settlement agreements", under s.23 of the Enterprise and Regulatory Reform Act. 

Most of the relevant legislation setting out the conditions for such agreements is amended from that date and will require an agreement to state on its face that the conditions regulating "settlement agreements" under the relevant legislation are satisfied. 

It is hoped that agreements still described as compromise agreements and expressly referring only to satisfaction of the conditions for compromise agreements will still work to waive claims.  However, to be on the safe side employers should amend their precedent agreements as follows:

• describe the agreement as a "settlement agreement" rather than a compromise agreement in any cover sheet, at the start of the agreement and in any other references in the agreement or schedules (possibly including the standard certificate from the employee's adviser);
• ensure that the agreement states that the conditions relating to both settlement agreements and compromise agreements under all of the relevant pieces of legislation are satisfied.  We recommend retaining the reference to compromise agreements in addition to settlement agreements because not all of the relevant legislation has been amended as yet. (The ERRA amends relevant Acts but not certain regulations;  further, in some cases the waiver may need to include claims under pre-Equality Act 2010 discrimination legislation which will not be amended.)

Please do contact us if you require any advice or assistance on this issue.