Approaching an employee about termination – are negotiations protected?
Since 2013, an employer has been able to have a confidential conversation with an employee about ending the employment without having to worry about that conversation being used against them later in an unfair dismissal claim.
What are pre-termination negotiations?
• Confidential conversation with employee – verbally or in writing.
• Section 111A of the Employment Rights Act 1996 – offers cannot be used as evidence in unfair dismissal claim.
• Tribunal clarified that even the existence of negotiation cannot be referred to as evidence of unfair dismissal
• Can be used in evidence of other type of claim – e.g. discrimination
• ACAS Code of Practice forbids improper behaviour which can include bullying and undue influence – this will mean that an employer cannot rely on these provisions if the conversation has been of a bullying nature.
In what will be a great relief to employers and their solicitors, the case of Faithorn Farrell Timms LLP v Bailey has finally provided clarification that the existence of pre-termination negotiations cannot be used as evidence in an employment tribunal. This was the first time that the scope of section 111A had reached the Appeal stage on unfair dismissal.
Section 111A of the Employment Rights Act 1996 provides that offers to end employment (for example, by entering into a Settlement Agreement) can be made on a confidential basis and that they cannot subsequently be used as evidence if the employee claims unfair dismissal. The exception to this is in cases of automatically unfair dismissal (e.g. on grounds of disability). There is no requirement that there already be a dispute for conversations to be confidential.
This ruling extends the legal position on unfair dismissal far beyond the protection of the “without prejudice” privilege. During negotiations, in many different areas (e.g. buying a house), you may have seen the words “without prejudice” somewhere in a letter or an email. Essentially, this is intended to prevent the content from being put before a court or tribunal as evidence. However, in an employment case, there would normally have to be an existing dispute for this rule to apply. This is often not the case when pre-termination negotiations begin but there can easily be a breakdown in the relationship between employer and employee as time goes on.
S111A provides protection
Although s111A clearly protects an employer against the content of negations being used as evidence, there was a lot of uncertainty as to whether the existence of a discussion was also caught under this rule. There was concern that references were being made to negotiations in order to strengthen the position of parties without actually breaking the rule on the evidence not being allowed (inadmissible).
The case at EAT
The claimant, a part-time secretary, was informed that this working arrangement would no longer be an option so she initiated settlement discussions. Various letters went back and forth marked “without prejudice”. The claimant then raised a grievance, saying that her employers were trying to bully her to avoid making a payment in a Settlement Agreement, referring to matters set out in the letters. She then issued tribunal proceedings claiming unfair constructive dismissal and sex discrimination.
The key issue arose regarding the interplay, in what can be used as evidence, between the “without prejudice rule” and s111A. The employers said that the letters could not be used in evidence because they were marked “without prejudice”.
The first tribunal found that these letters could be used as evidence. This was overturned at appeal. Whilst parties can waive their rights under “without prejudice”, the EAT held that they cannot do so under section 111A and said that not just the content of the discussions, but also the fact that they took place were protected.
What does this decision mean for employers?
Employers will now be afforded a much clearer position on how their pre-termination negotiations will be viewed in a case of unfair dismissal should the matter ever go to Tribunal. The existence of negotiations will be inadmissible (not allowed) as long as there is no improper behaviour. It is important to note here, that the case has returned to the first Tribunal to decide whether there was improper behaviour.
The EAT also confirmed that a tribunal can hear evidence about pre-termination negotiations in relation to one claim, but then disregard it for an unfair dismissal claim. So, in that respect, employers are not completely in the clear as far as the admissibility of pre-termination negotiations is concerned even if there has been no improper behaviour.
So long as your negotiations are in line with the ACAS Code of Practice on Settlement Agreements, then if an employer is faced with a claim of unfair dismissal, an employee will not be able to make any reference to the negotiations in a tribunal.
If you would like to know more about:
• Pre-termination negotiations;
• Settlement Agreements;
• Without privilege correspondence; or
any other employment law matter, please contact firstname.lastname@example.org