The new regime
On 29 July 2013 a new section 111A of the Employment Rights Act 1996 (the "ERA") came into force, with the intended effect that both employers and employees would be able to enter into negotiations about the proposed termination of an employee's employment, without those conversations being admissible in any subsequent ordinary unfair dismissal proceedings. When it was first proposed, the concept was called a "protected conversation" but it is now mostly referred to as a pre-termination negotiation or discussion. This all sounds like good news for employers, but there are some rather wide limitations to the new regime, as this note will show.
Without prejudice v pre-termination negotiations
Employers have long sought to have conversations about the proposed termination of an employee's employment under the guise of the "without prejudice" rule. However, such discussions are only truly inadmissible as evidence before a Court or Employment Tribunal if they represent a genuine attempt to settle an existing dispute. For some time, there has been debate about what amounts to a "dispute" in an employment context. For example, it is unlikely that the holding of an internal grievance or performance management process would be sufficient to constitute the dispute for these purposes. If employers conduct so-called "without prejudice" conversations in such a context, they run the risk of those discussions being admitted as evidence.
Certain conduct within a without prejudice conversation, namely "unambiguous impropriety", may lift the cloak of without prejudice privilege, therefore allowing the conversation to become admissible before a Court or Tribunal. What amounts to unambiguous impropriety has been construed narrowly by the Courts and is limited to behaviour such as unlawful discrimination and blackmail.
In order for the new pre-termination negotiations to be inadmissible before a Tribunal, there is no need for there to be a pre-existing dispute between the employer and the employee. This is in contrast to the without prejudice rule and is clearly a feature that will make the new concept attractive to employers.
However, whereas section 111A of the ERA states that an offer of a negotiated settlement made before dismissal can be made on a confidential basis, and will therefore be inadmissible, there are two significant caveats to the regime:
The concept of improper behaviour in the new pre-termination conversation regime is far more widely drawn than the principle of unambiguous impropriety in the without prejudice regime. Improper behaviour will include not only discrimination, harassment, bullying and victimisation but also undue pressure. Undue pressure will include (but is not limited to) circumstances when an employer does not give an employee reasonable time to consider any offer put to him or her, or telling an employee that the alternative to accepting the employer's proposal is that they will be dismissed.
- The first is that pre-termination negotiations are only inadmissible in ordinary unfair dismissal proceedings. If an employee brings any other claim, for example breach of contract, discrimination, whistleblowing or victimisation, the content of any such conversation will be admissible in evidence in those proceedings;
- Pre-termination negotiations will also be admissible if there has been "improper behaviour".
Proceed with caution
The obvious danger of the new pre-termination negotiations for employers is that, at the time an employer enters into such a conversation with an employee, it has no knowledge of what the employee will later allege to have occurred during that conversation.
If an employee later alleges that the employer's conduct in that conversation was discriminatory or that undue pressure was placed on them to accept an offer, the conversation will be admissible as evidence in any future proceedings. Employers are advised to keep comprehensive notes of meetings (marking them as appropriate so that they are not inadvertently disclosed in any subsequent claim).
Unsurprisingly, there remain areas of uncertainty with the new regime. For example, it is unclear what the position will be if an employee raises a grievance as a result of something that had occurred during a pre-termination conversation and later claims constructive unfair dismissal as a result of the outcome of that grievance process. In such a case, it is unclear whether the contents of the conversation will be admissible in evidence as part of the factual matrix leading up to the constructive dismissal.
Given that the exclusions to the without prejudice rule are construed far more narrowly than the rules relating to pre-termination negotiations, where possible, it is likely to be more beneficial for employers to rely on the without prejudice regime. However, in circumstances where there is a straight forward performance or conduct issue but clearly no pre-existing dispute between employer and employee, the new pre-termination negotiation regime is likely to be a welcome tool for employers to have sensible conversations with employees, without the fear of those conversations coming back to bite them in an Employment Tribunal.
As a matter of practicality, the new regime is probably going to lead to more employers taking advice before they have any proposed "off the record" conversations to reduce the likelihood of those conversations being admissible in evidence. The new regime is also likely to lead to the more savvy employees alleging that such conversations are not truly off the record and that anything said in the conversation bolsters any claim that an employee alleges he or she might have.