1. Pre-termination negotiations: understand the limitations
S111A Employment Rights Act 1996 provides a mechanism for employers to make an offer to an employee to terminate employment on a “protected” basis (that is, the conversation and offer cannot be disclosed in employment tribunal proceedings). The benefit of using this mechanism over simply entering into ‘off-the-record’ or ‘without-prejudice’ negotiations with the employee is that there does not need to be an existing dispute that an employer is making a genuine attempt to settle. However, the protection provided by s111A is limited: (a) the protection only applies in ordinary unfair dismissal proceedings; and (b) if either party engages in ‘improper behaviour’, the negotiations will only be protected to the extent the tribunal considers it just for them to be so.
The Employment Tribunal Appeal (EAT) has now provided a useful reminder of the limitations of relying on s111A. An employee alleged unfair constructive dismissal and sex and pregnancy and maternity discrimination. The EAT held that, in light of her claim, the protected conversation was admissible as she was asserting that she had been dismissed for an automatically unfair reason. It was not necessary for the employment tribunal to first make a finding of fact on this point. In contrast, where it is asserted that a protected conversation is admissible due to improper conduct, the tribunal must hear evidence and make a finding of fact first.
It remains relatively rare for an employer to make an offer of settlement to end employment in the absence of a pre-existing dispute so in most cases an employer can rely on the without prejudice rule. Where s111A is engaged, care must be taken to remember its limitations. In the recent case, the pre-termination negotiation was raised in the context of the employee’s pregnancy and maternity leave. Where discrimination is raised, any s111A negotiation which is not also stated to be without prejudice could be relied on by an employee in the employment tribunal. The employer must also ensure that any negotiations are not conducted in a manner which could be seen as discriminatory or as putting the employee under pressure.
The safest course remains for employers to state that any settlement discussions are without prejudice. While it is relatively uncommon for without prejudice communications to be challenged, employers must always remain alert to the fact that the without prejudice status will be lost where it has been tainted by fraud, undue influence or ‘unambiguous impropriety’. We are currently awaiting an important Court of Appeal decision, looking at whether or not without prejudice communications between in-house lawyers were in fact a fraud where they indicated that a potentially discriminatory dismissal was cloaked as a redundancy.
2. Non-disclosure agreements: time to review your approach
Following the government’s recent response to the use of confidentiality provisions and non-disclosure agreements in employment contracts and settlement agreements, the Equality and Human Rights Commission has issued guidance ‘calling time’ on such provisions in discrimination, harassment and victimisation cases as “everyone should have the power to speak out about harassment and victimisation. Nobody should be silenced”. While the guidance looks at employment contracts, of particular interest is the EHRC’s good practice guidance on settlement agreements that:
- Employers should consider on a case-by-case basis whether a confidentiality agreement is justified; most cases will not require an agreement to stop a worker discussing an act of discrimination. Where a confidentiality provision is used, it should be worded clearly to deal with the particular circumstances of the case and the worker should be informed why it is being used, so that they can take independent advice. Where restrictions are included, mutual obligations should be placed on the employer.
- The use of a confidentiality agreement should be signed off by a director (or equivalent) or by an appropriate delegated senior manager and, where reasonably possible, by someone not involved in the act of discrimination or hearing of any grievance related to it.
- During negotiations, the employer should ensure a the worker has the opportunity to be represented or supported by an independent adviser, trade union representative or colleague of their choice.
- The worker should take advice from an independent adviser on the settlement agreement, including any confidentiality agreement. An employer should pay a worker’s costs in taking independent advice “even if, having received the advice, the worker ultimately finds the terms unacceptable and reasonably decides not to sign the agreement”.
- The worker should be given a ‘reasonable amount of time’ to seek independent advice and consider the terms of the agreement. The guidance suggests at least 10 days.
- Employers should keep track of discrimination complaints and use of confidentiality agreements to allow them to identify systemic issues and measures needed to tackle them as well as ensuring that confidentiality agreements are not being misused. The employer’s board of directors (or equivalent) should have oversight of a GDPR-compliant central record of confidentiality agreements.
The guidance also looks at preventing such situations arising in the first place; employers need to make clear to workers how discrimination can be reported through policies, training, induction processes etc. Employers must ensure that any reports are taken seriously and the guidance emphasises that settlement should not be treated as the end of a matter. Acts or allegations of discrimination should be investigated and action taken to prevent any recurrence
Many employers will already have revised their use of confidentiality/non-disclosure provisions in light of the #metoo movement and guidance issued by the Solicitors Regulation Authority which have had an impact on legal advisers advising on these terms. New legislation is expected following the government’s recent consultation on the use of these provisions, but, in the meantime, this guidance places significant pressure on employers to get their house in order, particularly when dealing with discrimination and victimisation claims.
An employment tribunal or court is not obliged to take this guidance into account, but it may be used as evidence in legal proceedings where relevant. Employers must ensure they read the guidance and carefully consider what steps they should take to reflect good practice in their own processes when dealing with discrimination complaints. They should review their settlement agreements and employment contracts to ensure they reflect good practice. This review should include not only confidentiality/non-disclosure provisions but also any other terms, such as a requirement for the worker to warrant certain matters that may undermine the worker’s ability to otherwise speak out.
3. Disciplinary and grievance investigations: get it right
There has been a discernible increase in the complexity and sensitivity of the disciplinary and grievance investigations our clients are dealing with. We are therefore running roundtable events on 12 and 14 November to look at how to manage these investigations and keep them on track.
We’ will be addressing the issues that often derail the process including: sickness absence, confidentiality, anonymity, recordings and uncooperative witnesses. We’ will also look at when more sensitive investigation is required; for example, where sexual harassment or discrimination allegations have been made, or there are complexities related to the individual employee (such as mental health issues or “neurodiversity”).