The Employment Appeal Tribunal (“EAT”) has decided that if the effective date of termination (“EDT”) is in dispute in an unfair dismissal case, a tribunal can hear evidence of pre-termination negotiations if that evidence is relevant to determining the issue.
Where there is an existing dispute between the parties, the “without prejudice” rule will generally prevent statements or discussions made in a genuine attempt to settle a dispute from being used as evidence in a court or tribunal should the parties fail to reach an agreed settlement.
Where there is no existing dispute, section 111A of the Employment Rights Act 1996 (“s111A”) makes “pre-termination negotiations” inadmissible as evidence in any subsequent unfair dismissal, unless there has been improper behaviour. This inadmissibility rule for “pre-termination negotiations” applies to any offers made or discussions held, before the termination of the employment, with a view to it being terminated on agreed terms. Both the fact and content of the discussions are protected. Unlike the position in relation to the “without prejudice” rule, the protection under s111A cannot be waived by agreement between the parties.
In the recent case of Basra v BJSS Ltd, the employer invited Mr Basra to a disciplinary meeting after receiving a number of complaints about him from customers. At the same time, the employer wrote a letter to Mr Basra marked “without prejudice and subject to contract” offering him three months’ salary subject to his employment terminating immediately and him signing a settlement agreement – an alternative option to embarking on the disciplinary process.
Mr Basra accepted the offer by email “subject to contract and without prejudice” and stated that “today will be the last day at bjss”. However, Mr Basra subsequently argued that he had not resigned but was dismissed at a later date. No settlement was reached and Mr Basra brought a claim for unfair dismissal. Both the EDT and the manner of termination were in dispute.
The tribunal decided that Mr Basra’s email accepting the offer amounted to a resignation and dismissed his unfair dismissal claim. In reaching its decision, the tribunal did not take account of the without prejudice letter sent by the employer on the basis that it formed part of inadmissible “pre-termination negotiations” under s111A. However, the tribunal found the statutory inadmissibility rule under s111A did not extend to Mr Basra’s email accepting the offer because that protection ended with his agreement to leave on the proposed terms. Mr Basra appealed
Decision on appeal
The EAT allowed the appeal. With regard to the protection afforded by s111A, the EAT stated that the “chronological dividing line between what is, and what is not, admissible…lies on the point at which the contract is terminated”. In circumstances where there is a dispute as to the EDT, a tribunal will not be in a position to decide that dispute without considering all the relevant evidence, including evidence of any negotiations. Only once the EDT is determined will a tribunal be in a position to decide what evidence of pre-termination negotiations should be excluded when considering whether or not there has been a dismissal for the purposes of an unfair dismissal claim.
The EAT held that the tribunal should not have disregarded the without prejudice offer made by the employer. It went on to say that had the date of termination not been in dispute and had the only issue to consider been whether or not the ending of the employment relationship amounted to a resignation, dismissal or an agreed termination, then all evidence of pre-termination negotiations should have been excluded.
The case will now be re-heard by the same tribunal, taking into account Mr Basra’s email accepting the offer in the context of the employer’s without prejudice offer of settlement.
In circumstances where there is no existing dispute, s111A allows employers and employees to enter into confidential negotiations with a view to agreeing the terms on which an employee’s employment will end without the risk of evidence of those negotiations being later used in unfair dismissal proceedings. However, the protection only applies in relation to ordinary unfair dismissal claims. This means that the fact and content of pre-termination negotiations can be referred to in automatically unfair dismissal cases (such as whistleblowing), as well as in relation to discrimination or breach of contract claims, unless the discussions are covered by the “without prejudice” rule. Because an employer may not necessarily know what claims an employee might subsequently bring, there is inherent uncertainty in embarking on pre-termination negotiations.
As a result of this case, employers should also bear in mind when conducting pre-termination discussions that if there is a subsequent dispute about the EDT, the content of these discussions may be admissible as evidence to determine the EDT in subsequent proceedings. To reduce the risk of a dispute arising in relation to the EDT, ensure clear and unambiguous wording is used in any correspondence.