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The Range of Reasonable Responses Newsletter: April 2019

When I'm giving an employment law update I try not to focus too much on potential changes to the law. There is plenty of case law to look at which has a more immediate and practical impact. With Brexit hovering nebulously on the horizon I'm not sure there is much point in thinking about measures that the Government is proposing to implement a year from now - a lot can change before then!

This month, however, I want to look at two Government consultations on potential changes to employment law. Both annoy me for different reasons. What they have in common however is that politicians are using potential changes in the law to make political points rather than genuinely concern themselves with the practical impact of the changes being proposed. I suppose this is nothing new - and not a phenomenon confined to employment law - but I still find it irritating. 

Public Sector Exit Payments

If you are in the public sector, a major potential reform that has been hovering over you for the past three years has been the introduction of a £95,000 cap on payments made to employees leaving their employment. This month the Government published new draft Regulations with Secretary of State Liz Truss putting out this quote:

"it is clearly wrong when people leave public sector roles with massive payoffs. It incenses the public when they see their hard-earned money being used badly like this. That's why we are capping exit payments to stop unacceptably large pay-outs for senior managers."

This is infuriating. As anyone working in the public sector knows, the cap on exit payments will not just hit senior executives who are being lavished with ex gratia payments when they leave their post. If the Government has its way, the cap will affect long-serving public sector workers who are made redundant from even moderately paid posts.

This is because as well as covering direct payments to the employee the payments that count towards the overall cap also include 'pension strain'. This is the payment that an employer has to make into a pension fund when an employee is made redundant at an age when he or she is entitled to take an unreduced pension (the age is 55 in the case of local government employees). The employee does not have to be a fat-cat for this element alone to exceed the 95K cap. The cost of pension strain depends on a multitude of factors including the age of the employee, his or her length of service and also the current state of the pension fund. It is not a sum paid directly to the employee.   Not surprisingly, however, Liz Truss does not emphasise that her plan is to reduce the pension entitlement of middle-ranking public sector workers who are being made redundant.

There is no indication as yet of the timetable for the introduction of the cap, but it is clear that the current draft of the Regulations will not do. I explained some of the problems with the Regulations in my regular e-bulleting for West Midlands Councils and you can read what I had to say here. Essentially they have been rushed out ahead of the local government elections and before they could be checked properly. Given the changes that will clearly need to be made - possibly with further consultation - I can't see the change actually being made this year. With the political upheaval that we can expect in the next few months, it is difficult to see the Government really finding the time - but you never know.

For those interested, you can find the Government consultation here. Responses should be submitted by 3 July.

Non-Disclosure Agreements

The consultation on the abuse of confidentiality clauses in settlement agreements has just closed. This is one of the those consultations that happens because there is a lot of political pressure to do something but no very clear idea of what should be done. 

Underlying the debate about non-disclosure agreements - or gagging clauses if you prefer - is that there is something shameful about reaching an agreement in which money changes hands and the employee promises not to repeat the allegations that were the centre of the dispute that has just been settled. But if you are a party to that dispute then you will surely want to make sure that any settlement will at least bring the matter to an end.

Suppose you are an employer defending a claim for sexual harassment. You dispute the allegation, but realise that there is a risk of it succeeding. If you negotiate a financial settlement, you will want to make sure that the employee cannot use that fact to suggest that the allegations were well-founded. Why would you offer to settle a case, if the result is that the employee can claim victory and continue to repeat allegations which can no longer be tested in the Employment Tribunal?   

The fact is that a confidentiality clause has been included in every settlement agreement I have ever seen. They are not new and they should not be controversial. Recent concern has been centred on their use to silence whistleblowers - particularly in the NHS. Recently the Secretary of State for Health Matt Hancock was in the papers (Mail Online link here) defending NHS whistleblowers and pledging to end gagging clauses that prevent employees from speaking out to protect patients. Less recently - 3 years ago! - , the Secretary of State for Health Jeremy Hunt was in the papers (Daily Telegraph link here) defending NHS whistleblowers and pledging to end gagging clauses that prevent employees from speaking out to protect patients. 

But the fact is that whistleblowers are already protected. No agreement - including a settlement agreement - can prevent a worker from making a public interest disclosure - see S.43J Employment Rights Act 1996. Ministers speaking out for the rights of whistleblowers makes for good copy, but it is hard to see what more the law can do.

One concern - a key focus of the latest consultation - is that employee may be prevented by a settlement agreement from reporting criminal offences to the police. But again, no-one is really suggesting that settlement agreements can do this. The idea that a court could order someone to pay back the money they had received in a settlement because they reported a crime to the police is absurd. Changing the law to make this an express provision will make no practical difference. 

There may of course be something in the suggestion that people do not realise the limits of any non-disclosure agreement they may sign. One suggestion in the consultation is that the solicitor advising a claimant on the effects of a settlement agreement should specifically advise on the effect of any non-disclosure agreement - and that strikes me as a good idea. The consultation also suggests developing a standard form of wording for a non-disclosure clause, to avoid some of the more extravagant limitations that aresometimes reported. That too seems sensible - although actually coming up with standard wording suitable for all occasions may prove more difficult than the Government thinks. 

But we should be careful not to start regarding non-disclosure agreements as being a problem in themselves. We should remember that they form part of an agreement and that it takes two to make a deal. It may seem unfair that a well-resourced employer can make a legal problem go away by throwing money at it - but that can only happen if the aggrieved party is willing to accept the money. A claimant who feels strongly that the matter should not be swept under the carpet is entirely free to refuse any settlement and take the matter to a full hearing.

I think individuals are entitled to settle their claims. A victim of harassment or discrimination should be free to settle the matter privately and not obliged to fight it all the way to a Tribunal. But a private settlement will almost  inevitably include a confidentiality clause. If the parties are too limited in their ability to agree a non-disclosure clause then that will make it much harder to reach a settlement. 

Parish Notices

For those in London on 8/9 May I have two events. An evening session for South London CIPD on the 8th and then a full day in Hammersmith for West London CIPD on the 9th. Both are employment law updates - although the evening session will obviously just be edited highlights of the full day. The Hammersmith date is always great fun with a varied audience and lots of time for questions and discussion. 

If you are in the education sector then you might be interested in two conferences being run by the Local Government Association on Schools HR. The first is in York on 13 June and the programme is repeated in London on 18 June. On each date I'm running an update on employment law for schools. This looks at issues like safeguarding, social media use and other issues that have a particular impact on teachers and other school staff.

Thanks for subscribing to this Newsletter. Do check out my website ate  for more details of the sort of thing I do.



Copyright © 2019 Darren Newman Employment Law Ltd, All rights reserved.

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