Proposed changes to the Employment Rights Bill could give CIPD-qualified HR consultants new legal powers to advise on and sign off employee settlement agreements.
The bill amendment, proposed by Lord Pitkeathley and backed by the CIPD, aims to expand the number of professionals who are legally allowed to advise employees on settlement agreements.
The idea is that this would help ease the backlog of employment tribunal claims in the system. The government’s economic impact assessment for the bill indicates there could be a 15 percent increase in employment tribunal claims.
Settlement agreements are a way for employees to waive claims they have against their employer as a result of their employment or termination.
Matt Jenkin, employment partner at law firm Herrington Carmichael, said: “They remain a popular way of dealing with employment disputes and issues. In order to be a valid waiver of claims, the employee must have received independent legal advice on the effect of the agreement.”
However, he added: “As someone who advises regularly on settlement agreements, they can be complex, and so the method by which any advisor is certified as being qualified to provide advice on them is going to be scrutinised in detail.
“I also think there’s likely to be an additional issue expanding that category. One of the qualifications for a legal advisor to provide the necessary independent legal advice is that they have a policy of insurance in place that effectively covers off any claims that could arise as a result of the advice that’s being provided.”
He said that if HR professionals were to take up that opportunity (if the amendment is accepted) “they’re going to need to put insurance policies in place to cover off the cost of those claims”.
Jenkin said that the increased insurance premiums to provide advice “may be a deterrent to some HR advisors” that would like to go through the certification process to provide independent legal advice.
Senior consultant Steve Herbert said: “The risk of getting this wrong is significant, the insurance costs therefore likely high, and I’m not convinced that anyone would want to take the chance of using a HR professional over a legal one.”
