I am often being asked about confidential pre-termination negotiations and how to go about them. This has been an alternative way for employers and employees to engage in confidential “off the record” discussions on ending the employment relationship since 29 July 2013.

There are some significant limitations (see below) on when such negotiations will be treated as confidential. Where negotiations are not protected by confidentiality, they will become admissible in any future dispute before an employment tribunal. The ACAS Code of practice on Settlement Agreements focuses on the key requirements that must be met in order for such negotiations to be treated as confidential and inadmissible. There is no need for the parties to be in dispute before a confidential pre-termination negotiation can be initiated

What are the limitations of pre-termination discussions?

  • Confidentiality only applies in respect of ordinary unfair dismissal proceedings.Employers cannot be confident that their discussions will remain confidential in the context of claims that are based on more than just ordinary unfair dismissal. Confidentiality can be lost by the employee asserting other claims such as discrimination and whistleblowing.
  • If either party engages in improper behaviour, the pre-termination negotiations may become admissible. Parties will need to tread carefully if they want their conversations to escape tribunal scrutiny. Employers cannot threaten dismissal and be completely frank and honest in these discussions if they want them to remain confidential.

The Acas Code

The Acas Code of Practice on Settlement Agreements (the Code) sets out the following guidance on having a pre-termination discussion:

Proposing a settlement

A settlement agreement can be proposed by the employer or the employee at any time in the employment relationship. No existing dispute is necessary. There is no specified form for proposals; they can be oral or written, and do not have to be made face-to-face. The proposing party should consider explaining the reasons for its proposals. Settlement agreements need to comply with statutory requirements.

Meetings

If a meeting is held to discuss settlement proposals, the employee has no legal right to be accompanied but employers should allow this as a matter of good practice.

Timescales

Parties must be allowed a reasonable period to consider proposals and to receive advice. Ten days is generally the minimum but a longer period may be necessary, depending on all the circumstances.

Admissibility

Provided that the Code has been complied with, settlement discussions will be inadmissible in unfair dismissal proceedings. Inadmissibility does not apply to other claims. If either party engages in improper behaviour, settlement discussions will be inadmissible only to the extent that the tribunal considers just.

Improper behaviour

Improper behaviour is ultimately to be determined by the tribunal. The Code sets out the following non-exhaustive list of examples:

  • All forms of harassment, bullying and intimidation, including through the use of offensive words or aggressive behaviour.
  • Physical assault or the threat of physical assault and other criminal behaviour.
  • All forms of victimisation.
  • Discrimination because of age, sex, race, disability, sexual orientation, religion or belief, transgender, pregnancy and maternity, and marriage or civil partnership.
  • Putting undue pressure on a party, for example: not giving reasonable time for consideration of the proposal in accordance with the Code; an employer saying, before any form of disciplinary process has begun, that if a settlement proposal is rejected then the employee will be dismissed; or an employee threatening to undermine an organisation's public reputation if the organisation does not sign the agreement, unless the whistleblowing provisions of the Public Interest Disclosure Act 1998 apply.

For the full ACAS code see:

http://www.acas.org.uk/media/pdf/j/8/Acas-Code-of-Practice-on-Settlement-Agreements.pdf

Are there any other ways to have an “off the record” discussion?

Employers and Employees can still have “Without Prejudice” discussions. The common law principle of without prejudice is nothing new but such conversations can have difficulties in the employment context.  Such discussions are only “off the record” and not admissible before the court if they are made in a genuine attempt to settle an existing dispute and therefore also have their limitations. Employers and employees often wish to have conversations about options before a dispute has arisen. 

The best way forward…

In practice a lot of employers are still relying on “Without Prejudice” discussions and take the risk that if a settlement cannot be agreed then the discussion will be admissible. When pre-termination discussions have taken place then these often include other claims than ordinary unfair dismissal and would be admissible in court. However in practice most cases usually end in a settlement agreement. To date, there are no reported cases where the confidentiality of a pre-termination discussion has been tested through the courts. In practice employees have used the fact that negotiations may be admissible in a court to agree an increased pay out.

Employers need to be wary of the risks of having any alleged “off the record” discussions and carefully script their discussions depending on the circumstances to reduce the risks of further claims and paying more money out. 

Legal advice can help you script such discussions to minimise the risk of triggering claims or having any discussions being used against you in tribunal.