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 the employment tribunals.
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 however to this new found freedom and only in claims relating to unfair dismissal will such conversations be inadmissible.
Claims that relate to an automatically unfair reason for dismissal such as whistleblowing, union membership or asserting a statutory right are not covered by these confidentiality provisions. Furthermore claims on the grounds of discrimination, harassment, victimisation or other behaviour prohibited by the Equality Act 2010 will not benefit from this privilege.
Assuming no exceptions apply only in circumstances where there is evidence of ‘improper behaviour’ will such conversations have the potential of losing their confidential status. The Acas Code (Code of Practice on Settlement Agreements) has offered some guidance on what constitutes improper behaviour and has provided a non-exhaustive list of some examples, including;
a.) All forms of harassment, bullying and intimidation;
b.) Physical assault or the threat of physical assault;
c.) All forms of victimisation;
d.) Putting undue pressure on a party. For example;
a. Not giving the reasonable time for consideration (recommended 10 calendar days) of the terms of a settlement agreement;
b. An employer saying before any disciplinary process has begun that the employee will be dismissed if he/she choses to reject the settlement offer;
c. An employee threatening to undermine an organisation’s public reputation if the organisation does not sign the agreement.
Once improper behaviour has been established, pre-termination negotiations will only be admissible to the extent that the tribunal considers it just. Should employers be considering making use of Section 111A it is worth noting that a reasonable amount of time must be given for the employee to consider the offer and failure to do so may be considered ‘improper’.
It has yet to be tested how the tribunal will approach mixed claims, for example where there is an unfair dismissal claim as well as a claim of discrimination rendering pre-termination negotiations admissible – and employers should be warned that until this is tested or additional guidance is offered conversations may well not retain their full confidentiality and caution must still be exercised when having such discussions.
A recent practical application demonstrates the benefits of Section 111A; an employee was given legal advice and support concerning settlement terms offered under the cloak of a protected conversation. The employer had formulated a strong case against the employee which concerned performance issues and reading between the lines it was clear to see where it was heading should the offer be rejected, but with some careful wording the employer complied with the requirements under the Acas code and negotiations were swift leaving both parties with an outcome they were both happy with.
Only time will tell how tribunals deal with ‘hybrid’ cases, but for now, when used correctly they are an effective tool in an employer’s armoury and have the potential to create a more flexible workforce.