For the last three years employers have been able to have conversations about exiting staff from their organisation on agreed terms without those discussions being used against them in ordinary unfair dismissal claims in the event that no agreement is reached.
The protection offered to employers is limited. It only applies to claims for unfair dismissal and even then does not apply if there has been any ‘improper behaviour’ or the claim is one for automatic unfair dismissal. If an employee, as is often the case, brings another claim (eg for discrimination, holiday pay, notice pay) as well as an unfair dismissal claim, they can refer to the protected conversation in the other claim.
Many of our clients have used protected conversations (which are also known as settlement discussions) as an effective way to short-cut a disciplinary or performance process and, if handled correctly, they can allow an employee to leave with dignity in exchange for, an often modest, payment of compensation.
The difficulties arise where the parties cannot reach agreement and the employer has to manage the problem that prompted the protected conversation in the first place. Employees are often keen to allege that any formal action taken against them following an unsuccessful protected conversation, has been pre-judged and, in the context of their dismissal, demonstrates that their employer acted unfairly.
We have seen many ET1s that contain references both to the fact that a protected conversation has taken place and details of that conversation. As the employee chooses what to put in the claim form, an employer can’t prevent them from referring to the conversation. In these circumstances employers understandably, often keen to put their side of the story across and also include reference to the protected discussions in their ET3. This is not least because, in the absence of other “open” or “on the record” communications with the employee, the protected conversation can explain “gaps” in the process which, might otherwise be used to demonstrate delay and lead to a finding of procedural unfairness.
A recent case provides some salutary advice however.
In Fairhorn Farrell Timms v Bailey, EAT, an employee who had been working part time for a number of years was told she had to increase her hours. She didn’t want to work full time and she initiated a protected conversation, clearly in the hope that she would receive financial compensation in exchange for quietly leaving her job.
Unfortunately the parties were not able to reach agreement and their relationship deteriorated. A number of letters and emails were sent which contained lengthy expositions of their respective views on their relationship, with little reference to any negotiations. Ms Fairhorn raised a grievance which referred to the protected conversations and after this was rejected, she resigned and claimed constructive unfair dismissal and sex discrimination. Her ET1 also referred to the protected conversations, and in response, her employer also referred to those conversations and to written correspondence about them.
The Tribunal was asked to decide whether the parties could rely on their protected conversations and in particular if:
- the protection covered both the content of the discussions and also the fact that discussions had taken place;
- the existence of another claim (in this case discrimination) rendered the material admissible for an unfair dismissal claim; and
- the parties can agree to waive the protection and put evidence of the protected conversations before the Tribunal.
The Tribunal found that references to the fact that a protected conversation had taken place were admissible but not the discussions themselves. That finding was reversed by the Employment Appeal Tribunal which provided the following extremely useful guidance.
- Protected conversations can only be used to agree terms in claims that might otherwise become unfair dismissal claims (but not automatically unfair dismissals). This means that protected conversations can be used to initiate termination discussions about any of the potentially five grounds of dismissal, including SOSR and redundancy. They are not limited to misconduct or performance dismissals.
- If another claim is also brought that is not protected, the material does not become admissible for both claims. The protected conversation cannot have any bearing on the unfair dismissal claim.
- The without prejudice nature of a protected conversation refers to both the content of those conversations and the fact that they have taken place at all – so the employee can’t refer at all to the protected conversation.
- More significantly, the protected nature of the conversations is not limited to discussions between the employee and employer but also applies to discussions by people within the employer’s organisation. This means that discussion between managers and HR will also be protected; they do not have to be directly involved in speaking to the employee.
- Parties cannot agree to disclose the protected nature of these conversations. So any reference to protected conversations in the ET1, the ET3 or other documents must be removed or blanked out and documents relating to the protected conversation must be excluded from the tribunal bundle.
Lessons for employers
This is the first time the EAT has considered the new rules on protected conversations and the guidance offered has clarified a number of issues and provided a useful framework for employers.
What will you do if you cannot agree terms?
It is important that you think about how you are going to manage the relationship going forward if you cannot agree terms with your employee. Do not assume that the employee will accept the offer. This is particularly important if you are having protected conversations with a number of employees (perhaps in relation to a redundancy exercise) and most of the employees have accepted the offer and entered into settlement agreements. It can be tempting to get on with the process and ask all staff to remain at home. If you do this, however, you will need to provide an explanation for your actions in the event that no agreement is reached. So, for example, if you want someone to remain at home whilst you are having the protected conversation, ensure that you have an “on the record” document setting out why the employee isn’t required to come in to work. A simple email exchange should be enough – for example setting out that you have agreed that they will take a period of paid leave.
Make sure that you do not take any steps whilst discussions are on going which might compromise your position later on
You should not act in any way that suggests that the employee has already been dismissed, for example, by asking him/her to return all company property. Make sure that you have in place a paper trail that will enable the employee to return to work if the negotiations aren’t successful, and that explain the employee’s absence. In short – don’t burn any bridges until you’ve got the signature on the settlement agreement!
Do not pressurise the employee to accept the offer
Once a decision has been made to try and exit the employee, most organisations will want to move quickly. It is important however not to threaten or pressurise the employee into accepting the offer as this may amount to “improper behaviour”. If improper behaviour is established the protected nature of the conversations falls away and the entire conversation can be taken into consideration by the Tribunal.
ACAS has published a Code of Practice on Settlement agreements which contains guidance on how to carry out a protected conversation. It recommends giving employees at least ten days to consider a settlement agreement offered during a protected conversation.
As well as giving the employee time to consider their position, be careful about the language you use and the impression it gives. In the case referred to above, the employee alleged that correspondence sent to her by her employer contained unsubstantiated threats and ultimatums. She said that this amounted to threatening and bullying behaviour. That issue has been sent back to the Tribunal for it to consider, as no findings of fact had been made on the question, but the EAT suggested that improper behaviour could be a wide concept and could include this type of behaviour.
It is also worth remembering that the protected status of the conversation and accompanying correspondence will only apply to conversations that are made in an attempt to reach a settlement. Other material might be looked at by the Tribunal. The EAT suggested that “extraneous material”, such as lengthy expositions of the parties’ respective views on their relationship, with little reference to any negotiations, could be excluded from the protection.