How protected is a "protected conversation"?

The "protected conversations" or "pre-termination negotiations" regime under section 111A of the Employment Rights Act 1996 was introduced with much hype in July 2013.  Now, over 18 months after its implementation, I look at how much flexibility the statutory regime has really given employers and employees when parting company on mutually agreeable terms, and whether it has, in practice, led to more frank and open conversations between employers and employees than before its introduction.

The position pre-section 111A

Employers were of course already having "off the record" conversations with employees before the introduction of section 111A, under the common law "without prejudice" principle, but such conversations were only truly off the record and inadmissible in any subsequent proceedings if the parties were already in "dispute" and the negotiations were a genuine attempt to settle that dispute.  Often, employers would want to have a 'fork in the road' conversation with an employee before a "dispute" had actually arisen, but were (rightly) cautious about making an opening gambit due to the risk of the employee arguing that there had been a breach of trust and confidence and/or that any subsequent dismissal procedure must be a sham and unfair. 

So has section 111A, which enables pre-termination negotiations to be treated as confidential and inadmissible in certain subsequent proceedings even where there is no current employment dispute, made employers more forthcoming about having such conversations with employees?

It appears not, due to the various limitations of the statutory regime. 

The limitations of section 111A

1. "Ordinary" unfair dismissal cases only

The regime is limited in scope in that it only applies to "ordinary" unfair dismissal cases; it does not apply where the employee is asserting that there is an automatically unfair reason for the dismissal (such as a whistleblowing).  Nor does it apply to other complaints such as discrimination, harassment or victimisation, or breach of contract (including wrongful dismissal).  Evidence of pre-termination negotiations will be admissible in such cases unless the common law without prejudice rule applies.

It still remains to be seen how cases in which an employee is alleging multiple causes of action; for example, discrimination and ordinary unfair dismissal, or an ordinary unfair dismissal case where the employee is alleging constructive dismissal based on the employer's breach of trust and confidence, will be dealt with in terms of the admissibility of any pre-termination negotiations.

In the meantime, employers in our experience tend to be steering clear of protected conversations in situations where the employee in question could have a potential discrimination claim, unless the employer is confident that it is also protected under the without prejudice principle.  Given that discrimination/whistleblowing claims are always a risk as "add-on" claims to ordinary unfair dismissal claims, given the implementation of tribunal fees and the cap on potential compensation in ordinary unfair dismissal claims, in my view the use of statutory protected conversations has not been massively significant.   

The regime seems to be of most use with 'low-risk' employees (those thought unlikely to bring discrimination claims or other unprotected complaints), or those at a senior level - where the settlement package offered by the employer is sufficiently generous and the employee is likely to take a pragmatic approach to such negotiations.

However, as Rachel Lewis commented in her blog, we have, though, seen an increase in employees making use of section 111A and initiating negotiations with their employers in order to avoid lengthy redundancy or performance management processes and walk away with enhanced exit packages.  This practice is likely to continue.

2.  No "improper behaviour"

Employers also may have been put off initiating protected conversations due to the requirement that there is no "improper behaviour" by either party, as this will mean that any pre-termination negotiations will only be inadmissible as evidence to the extent that the tribunal considers just. 

What constitutes improper behaviour is ultimately for a tribunal to decide on the facts of a particular case, although the ACAS Code of Practice on Settlement Agreements (the Code) sets out a non-exhaustive list of examples, which includes:

• intimidation through the use of offensive words or aggressive behaviour; and
• putting undue pressure on a party by, for example: 
  • not giving reasonable time for an employee to consider the terms of a proposed settlement agreement; or
  • an employer saying before any form of disciplinary process has begun that if a settlement proposal is rejected, then the employee will be dismissed.

The threshold for impropriety under section 111A is therefore much lower than that under the without prejudice principle.  As Rachel Lewis explained in her blog post, there are narrow exceptions to the without prejudice rule, which include unambiguous impropriety, misrepresentation and fraud, whereas it would be relatively easy for an employer to be considered to have behaved improperly under section 111A where it wishes to conclude negotiations quickly and puts a time limit on the offer made to the employee, or responds to an employee's query as to the consequences of not accepting the offer. 

The Code recommends, as a general rule, a minimum period of 10 calendar days should be given to allow the employee to consider the formal written terms and to obtain independent legal advice.

3. Employee should be accompanied

The Code also suggests that, whilst it is not a legal requirement, employers should allow employees to be accompanied at the meeting at which the pre-termination negotiations take place, by a work colleague, trade union official, or trade union representative, as a matter of good practice.  This is often an unattractive proposition as it immediately feels as though it puts the process on a more formal footing and can impede the parties from having a frank conversation, particularly if the employer does not wish to disclose the package it is prepared to offer the employee to their colleague.

Failure to follow the Code does not, in itself, make a person or organisation liable to proceedings, nor will it lead to an adjustment in compensation awarded by an employment tribunal.  However, it will be taken into account by a tribunal considering relevant cases.

Conclusion

Whilst on the face of it, section 111A is helpful to employers, in that it effectively extends the without prejudice principle to pre-termination negotiations where there is no existing dispute, it has not in our experience, in practice, had a huge impact, or led to a dramatic increase in the number of off the record conversations and settlement agreements.  Employers still need to tread cautiously so that they do not fall foul of the limitations of the regime.  However, in the right circumstances and provided the employer conducts its approach in accordance with the Code, initiating a "protected" conversation under section 111A could lead to an amicable parting of ways.