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Termination Negotiations in Practice

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19 October 2016

Termination Negotiations in Practice

Employers are able to meet with their employees to discuss terminating their employment. The obvious problem here is that where an employer may think they are being fair and reasonable an employee can very much disagree. The best way to advance these types of negotiations is under one of the banners of confidentiality.

Protected conversations or Pre-Termination Discussions are covered under s.111A Employment Rights Act (ERA) 1996 and were introduced to enable employers to discuss with their employee’s the termination of their employment. The contents of these discussions will remain confidential and cannot be used as evidence in any further employment tribunal proceedings for unfair dismissal (but would be disclosable for discrimination claims etc).

The alternative is for the parties to make use of a common law principle of “without prejudice”. This is a principle which allows two parties to a dispute to negotiate on the settlement of that dispute but without the fear that the contents of these negotiations would be used against them later. The without prejudice confidentiality does not kick in until the parties are in dispute. Any mere conversations prior to the start of the dispute will not fall under the rule. So if an employee thinks that everything is hunky dory but an employer wants to dismiss them – the initial conversations would not be covered by the without prejudice rule.

A protected conversation does not require a dispute to be in existence, however, “without prejudice” discussions are confidential for all claims, not just unfair dismissal.

Recently the Employment Appeal Tribunal had to look at how these two protections overlap.

Mrs Bailey was employed by Faithorn Farrell Timms LLP (FFT LLP). FFT LLP expressed their intention to terminate Mrs Bailey’s employment and settlement discussions began 10 December 2014. However, the dispute only began on 7 January 2015.

Bailey sought to later rely on the contents of correspondence which was marked ‘without prejudice subject to contract’ when raising a grievance on 26 January 2015. Bailey went on to claim constructive unfair dismissal and sex discrimination.

In the first instance the employment tribunal were required to decide whether the letters were admissible as evidence according to the common law principle, and / or the statutory concept of protected conversations. The employment tribunal found that the letters were not wholly inadmissible under each concept. Firstly, the tribunal stated that the s111A ERA applies only to unfair dismissal claims, not discrimination claims and went on to state that s111A ERA protects the details of any termination offers made, rather than the existence of any offers or discussions. Both parties appealed this decision.

The EAT found that s111A allows the fact that pre-termination discussions took place to be admissible, despite the clear wording of s111A that indicates any evidence of pre-termination negotiation is inadmissible in relation to the unfair dismissal claim. However, the contents could be considered in the context of the other claims.

The EAT also confirmed that the principle of without prejudice only applies after a dispute commences. Therefore, in this case it was only evidence after 7 January 2015 that could benefit from the without prejudice privilege. Any discussions prior to that date could be protected by s111A.

Whilst these areas of law seemingly overlap due to the nature of the common law principle and the purpose of the statutory concept, it is apparent that the tribunals are attempting to keep them as two separate rules. This is most poignant when the employee is considering bringing a discrimination claim.

As you can tell, the problems will only really come from being under protected rather than over protected. Careful planning can avoid comments being put in front of a judge which could be embarrassing or costly.

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