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‘Off the record’ discussions: What’s the scope of protection for employers?

Since 29 July 2013 employers have been able to engage in confidential, frank discussions with employees concerning exit negotiations and parting ways on mutually agreeable terms. These ‘protected conversations’ attract a degree of privilege and subject to certain exceptions, are inadmissible in unfair dismissal proceedings before an Employment Tribunal.

Pre-termination negotiations are defined in section 111A of the Employment Rights Act 1996 as “any offer made or discussions held, before the termination of the employment in question, with a view to it being terminated on terms agreed between the employer and employee”. Unlike the traditional ‘without prejudice’ model this form of privilege extends to discussions where there is no current employment dispute or where one or more of the parties is unaware that there is an employment problem.

There are exceptions to the regime; section 111A only applies to “ordinary” unfair dismissal cases and does not apply where the employee is asserting that there is an automatically unfair reason for the dismissal. Nor does it apply to other complaints such as discrimination or harassment. This means that evidence of pre-termination negotiations will be admissible in cases such as these unless the employer can rely on the without prejudice rule. In addition protection may be lost where the employer is deemed to have behaved improperly during negotiations.

Up until now we have had no case law testing the scope of the privilege given by section 111A; however, in the recent case of Faithorn Farrell Timms LLP v Bailey, the Employment Appeal Tribunal (EAT) held that the inadmissibility of settlement negotiations extends not only to the content of those negotiations but also to the simple fact that negotiations have actually taken place.

Background

Mrs. Bailey, the claimant, was employed part-time as a secretary until her resignation on 26 February 2015. At the end of 2014, an issue had arisen in relation to her working hours and as a result Mrs. Bailey initiated discussions about a settlement agreement.

Mrs. Bailey exchanged several without prejudice letters with her employer around general terms of settlement and her employer replied, albeit not marked without prejudice. By the end of January Mrs Bailey had raised a grievance and as part of that referred to the settlement negotiations which had previously taken place. The grievance was not upheld and Mrs Bailey resigned claiming unfair constructive dismissal and sex discrimination. In her claim she made specific reference to the settlement negotiations as evidence of her employer’s “…threatening and bullying behaviour”. At the Tribunal hearing an issue arose as to the admissibility of documents which referred to those negotiations.

In essence, following the without prejudice principle, the Tribunal concluded that the documents were not wholly inadmissible; in relation to protection given by section 111A, the Tribunal stated that this did not extend to the claim of sex discrimination and that the inadmissibility of evidence is limited to “…the details of any offers made or discussions held, and not to the simple fact of there having been such offers or discussions. The Tribunal is often made aware that there has been correspondence on a without prejudice basis, and I see no objection to that.”

The employer appealed, claiming the Tribunal’s approach to section 111A was too restrictive.

EAT decision

The EAT made three key statements in relation to the protection given by section 111A:

1. Protection extends not only to the content of any offers made or discussions held, but also to the basic fact that there have been such offers or discussions. This means that a claimant cannot rely on the existence of those negotiations to support an unfair dismissal claim.

2. The scope of protection also includes discussions which take place within the employer’s organisation between relevant managers; the EAT judge stated “I am unable to see that the application of this provision is limited to the evidence of the negotiations from those who were directly involved. It will be fairly common place for a manager to have to report back to a Board, higher management or HR on any such discussions; it would run counter to the purpose of section 111A if evidence of those reports was ruled to be admissible”.

3. Unlike the without prejudice principle the privilege under section 111A cannot be waived by the parties in order to admit evidence.

Impact on employers

This is a useful decision for employers as it gives clearer guidance on the scope of protection that can be relied on. Employers can have ‘out of the blue’ exit discussions with employees without fear that documents or conversations will be admissible in evidence in any later proceedings. However, this is subject to limitations; in cases where, for example, there is a claim of discrimination as well as an unfair dismissal claim, rendering all or part of pre-termination negotiations admissible, employers should be aware that conversations may well not retain their full confidentiality and caution must still be exercised when having such discussions.

Protection may also fall by the wayside where there has been ‘improper behaviour’ by the employer during the negotiations. The ACAS Code of Practice on Settlement Agreements offers guidance on what constitutes improper behaviour including bullying, harassment and undue pressure as examples.

So, whilst employers can gain benefits from protected conversations, caution should still be exercised and advice sought to minimise the risk of conversations being ‘outed’; the more strategic employee may seek to rely on an ‘off the record’ chat in a future claim arguing that the employer’s behaviour during discussions amounted to bullying thereby triggering the improper behaviour rule.

 

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Legal news, views, trends and tools for HR Professionals. Stay ahead. Go further