The Enterprise Act's provisions on compromise agreements, including renaming them "settlement agreements", start on 29 July.  Alongside this change, the rules on pre-termination offers also come into force.  A tribunal will not take account of any offer made or discussions held with a view to termination on terms agreed between employer and employee, although the confidentiality of negotiations is preserved only in relation to an unfair dismissal claim (and not including automatically unfair dismissals).  The new rules apply to offers/discussions made or held on or after 29 July.  "Improper behaviour" can prevent the new non-disclosure rule from applying and the ACAS code of practice explains that, as well as including any harassment, victimisation or discrimination, this also covers putting "undue pressure" on the employee, for example by not allowing the minimum time (10 calendar days) to consider the formal written offer, or telling an employee that he or she will be dismissed if the offer is not accepted.

"Without prejudice" communications which are made for the purpose of a genuine attempt to compromise an existing dispute and to avoid litigation cannot, generally speaking, be put before the court as evidence at the moment.  The idea is to encourage parties to settle their disputes.  One of the main reasons for introducing the new settlement agreement rules was because of the uncertainty around whether discussions about ending employment can take place on a "without prejudice" basis in situations where it is unclear whether there is an existing dispute between the parties.

A recent EAT case, A v B & C, illustrates the complexities of the "without prejudice" rule in an employment context.  The claimant was a teacher who had been investigated by the police because of alleged inappropriate behaviour with female pupils.  The timing of events, which turned out to be crucial, was:

  • 22 September: the claimant attended a disciplinary hearing.  The panel decided to give him a final written warning but he was not told this at the time
  • 13 October: an email from the claimant's trade union officer to a member of HR marked "without prejudice" referred to the employer's willingness to offer a compromise agreement
  • 27 October: a telephone conversation between the parties to the 13 October email referred to "off the record" discussions; an attendance note of the call was made
  • 11 November: the claimant was formally notified of the decision to issue him with a final written warning
  • 27 March: the claimant was dismissed following a second disciplinary hearing relating to further allegations.

In his claim for unfair dismissal the claimant asked for a ruling that documents, purporting to allow him to be paid £30,000 to "go quietly", could be produced in evidence.  In particular, the claimant's team wanted the tribunal to see the 27 October attendance note, in order to demonstrate their contention that, even before the second set of disciplinary proceedings got under way, the panel had expressed a wish to dismiss him.

The EAT looked closely at the timing and concluded that the 13 October email was subject to the "without prejudice" rule – because at that point the claimant did not know he would be given only a written warning and would not be dismissed (so that there was the possibility of litigation in the form of unfair dismissal proceedings).  But subsequent documents were not, because by then it was clear to both sides that the claimant was not going to be dismissed on the basis of the initial disciplinary allegations.

The new rules on pre-termination negotiations may allow an employer in this situation to prevent a tribunal from seeing documents of this kind, even though they are not "without prejudice".