In Basra v BJSS Ltd the Employment Appeal Tribunal (EAT) held that where the effective date of termination is in dispute in an unfair dismissal case, a tribunal can hear evidence of pre-termination negotiations if it is relevant to determining the issue.
Where there is an existing dispute between the parties, the 'without prejudice' rule generally prevents 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 makes pre-termination negotiations inadmissible as evidence in any subsequent unfair dismissal, unless improper behaviour has occurred. 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. The fact and content of the discussions are protected. Unlike the position under the 'without prejudice' rule, the protection under Section 111A cannot be waived by agreement between the parties.
In Basra 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 Basra marked "without prejudice and subject to contract" offering him three months' salary subject to the immediate termination of his employment and the signing of a settlement agreement – an alternative option to embarking on the disciplinary process.
Basra accepted the offer by email "subject to contract and without prejudice" and stated that "today will be the last day at bjss". However, he subsequently argued that he had not resigned, but rather was dismissed at a later date. No settlement was reached and Basra brought a claim for unfair dismissal. The effective date and manner of termination were in dispute.
The tribunal held that Basra's email accepting the offer amounted to a resignation and dismissed his unfair dismissal claim. In reaching its decision, the tribunal took no account of the without prejudice letter sent by the employer on the basis that it formed part of inadmissible pre-termination negotiations under Section 111A of the Employment Rights Act. However, the tribunal found that the 'statutory inadmissibility' rule under Section 111A did not extend to Basra's email accepting the offer because such protection ended with his agreement to leave on the proposed terms. Basra appealed the decision.
The EAT allowed the appeal. With regard to the protection afforded by Section 111A, it 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 the effective date of termination is in dispute, a tribunal will not be in a position to decide the dispute without considering all the relevant evidence, including evidence of any negotiations. Only after the effective date of termination has been determined can a tribunal decide what evidence of pre-termination negotiations to exclude when considering whether 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 continued to state that had the date of termination not been in dispute and the only issue to consider had been whether the ending of the employment relationship amounted to a resignation, dismissal or agreed termination, then all evidence of pre-termination negotiations would have been excluded.
The case will be re-heard by the same tribunal, taking into account Basra's email accepting the offer in the context of the employer's without prejudice offer of settlement.
Where there is no existing dispute, Section 111A allows employers and employees to enter into confidential negotiations with a view to agreeing the terms on which the employee's employment will end without the risk of evidence of those negotiations being used in unfair dismissal proceedings. However, this protection applies in relation to ordinary unfair dismissal claims only. Therefore, the fact and content of pre-termination negotiations can be referred to in automatically unfair dismissal cases (eg, whistleblowing), as well as in relation to discrimination or breach of contract claims, unless the discussions are covered by the 'without prejudice' rule. As an employer may not know the claims that an employee will subsequently bring, there is inherent uncertainty in embarking on pre-termination negotiations.
As a result of this case, employers conducting pre-termination discussions should bear in mind that if a dispute about the effective date of termination arises, the content of these discussions may be admissible as evidence to determine the date of termination in subsequent proceedings. To reduce the risk of such a dispute arising, employers should ensure that clear and unambiguous wording is used in all correspondence.
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