Frequently, employers and employees may get to a point where ‘the writing is on the wall’ and it often suits both sides to have a frank discussion over what it would take to amicably bring the relationship to an end. The law recognises that parties should be free to have such discussions without fear of incriminating themselves. However, it used to be the case that employers had to wait before a dispute had arisen before they could rely on ‘without prejudice privilege’ to advance settlement proposals. Often, employers would do so long before the parties were in dispute, and it would often take the form of an ultimatum – jump or be pushed! This led to a body of case law which made it clear that employers did so at their peril and, if they spoke too soon, the discussions were disclosable in tribunal when facing a constructive dismissal claim.
In recognition of the limitations of the ‘without prejudice’ rule, new legislation was introduced four years ago by section 111A employment rights act which makes provision for protected discussions. This provides a safe space for employers to advance exit proposals without fear of being cited in legal proceedings. It provides a welcome commercial alternative to a protracted disciplinary or performance management process for example.
Unfortunately, many employers jumped on the band wagon without understanding the detail. They failed to appreciate that the protection does not apply where the employer conducts itself improperly or where the facts could give rise to a discrimination or constructive dismissal claim. ‘Improper conduct’ might be presenting termination as a foregone conclusion, putting unnecessary pressure to resign or accept a deal. There are still too many cases where employers believe they can say what they like behind closed doors, only to find that the leverage they were using to close the deal is fully disclosable before an Employment judge. In losing the protected status of the conversation, the chances are any subsequent tribunal claim is lost too.
Consider the following when thinking about using a protected conversation.
- Start off with your open position first before you have your protected discussion. If its redundancy; performance or disciplinary, get your open correspondence on record first or have your first official meeting before you have a protected conversation.
- Test the water. Don’t present a pre-prepared settlement agreement, or even mention a settlement figure at the outset. Just ask the employee if they would be willing to explore alternatives to the formal process. If they say no, you haven’t compromised anything. If they say yes – it’s going to be difficult for them to argue later that they were not open to negotiation.
- If the employee is receptive, schedule a subsequent meeting where you do advance your proposals and even your settlement agreement.
- Allow the employee to be accompanied to that meeting. Whilst there’s no legal right to be, it will naturally keep you in check and you’re less likely to overstep the mark.
- Have another manager or HR officer present to take notes. If it is alleged that your conduct was improper, you will want to evidence that you did it properly.
- From the outset, state that the meeting is being conducted pursuant to S111A Employment Rights Act and on a Without Prejudice basis. They are 2 different legal principles with different legal tests. If you don’t succeed on one, you may well do on the other. Best to cover both bases.
- Put your proposals to the employee and then allow them adequate opportunity to consider them – ideally 5-10 working days.
- Issue minutes of the discussion up in writing marked ‘Without Prejudice and subject to S111A Employment Rights Act 1996’
- By all means mention what will happen next under the formal “open” process – but don’t allude to the likely outcome or present it as a foregone conclusion.
- Avoid compelling employees to stay off work whilst they consider their position. At most, offer that as an option but only if that is what they want.
- Do not implement terminal measures like freezing their email account; requiring them to hand back their company property etc. unless you suspect gross misconduct If you feel you must in order to protect the business, then accept you are taking a commercial risk. Therefore weigh up the cost of an unfair dismissal claim as against the damage the individual can realistically do.
- Lastly, as soon as the deadline for their response passes, get the employee back into work (if they have taken leave of absence) and continue with the open process previously announced.