Amendments to the Enterprise and Regulatory Reform Bill were tabled on 19 June. These included the addition of a new section to the Employment Rights Act 1996, which would enable employers and employees to have what the Government called “protected conversations”.

David Cameron announced a proposal in November 2011, saying the law should be changed, “so a boss and an employee feel able to sit down together and have a frank conversation, at either’s request”, without the fear that the discussion could be used against them in later tribunal proceedings. The proposal presented an alternative to the “without prejudice” rule.

It had been suggested that employers would be able to use protected conversations to discuss issues such as work performance and retirement plans honestly and openly and to allow employers to agree an exit with an employee where the employment relationship is simply “not working”. The proposed legislation, however, shows that the intended application of protected conversations is to be more limited, although the proposal remains significant. As proposed, the rule:

  • will only apply to unfair dismissal claims and not, for example, discrimination or breach of contract claims. If a discrimination or breach of contract claim is brought at the same time as an unfair dismissal claim, it seems that the "protected conversation" could be taken into account in the unfair dismissal claim;
  • will not apply in any of the automatic unfair dismissal situations, such as whistleblowing; and
  • will not apply (or will only apply to a limited extent) where the behaviour of the employer has been "improper". There is likely to be plenty of argument about what “improper” means and, of course, a tribunal is going to have to hear all about the protected conversation in order to determine whether or not the behaviour has been improper.

It is also noteworthy that for the first time there is legislative recognition of the practice of making offers without prejudice save as to costs in the employment tribunal.

As the legislation is drafted, it remains uncertain as to how protected conversations will operate in practice and how much use they will be to employers. However, it seems likely that something will be introduced.

The Enterprise and Regulatory Reform Bill is still being debated in Parliament and we expect further amendments to the Bill to be announced in the coming weeks.