(Un)protected conversations: a cautionary tale

The recent case of Harrison v Aryman Ltd has served as a good reminder of when protected conversations will, in fact, be admissible as part of later proceedings.

‘Protected’ (or s.111A) conversations have, for some time now, provided a degree of comfort for both employers and employees when seeking to have a confidential ‘off the record’ conversation about the terms on which an employment relationship that really isn’t working (for one or both parties) might come to an end.

This differs from the protection afforded by the ‘without prejudice’ (common law) principle, which requires there to be a pre-existing dispute in order for discussions to be kept out of subsequent proceedings (which isn’t always the case, hence the desire to allow employers and employees greater flexibility in terminating contracts on mutually agreeable terms; cue the previous amendments to the Employment Rights Act (ERA) 1996 to introduce the ‘protected’ conversation).

One of the fundamental ways in which ‘protected’ conversations might ease anxiety is that the parties may feel safer to speak openly, comforted by their understanding that the conversation is inadmissible in the event of later proceedings, or so they think.

However, as with all general rules (particularly in employment law, dare I say it) there are limitations and exceptions:

1. The protection only applies if the employee brings ordinary unfair dismissal proceedings. It does not apply where the employee alleges, for example, that they were dismissed because of an automatically unfair reason or discrimination. In such cases, evidence of the negotiations will be admissible.
2. If either party engages in ‘improper behaviour’, the negotiations will only be protected to the extent the tribunal considers it just that they are inadmissible (s111A(4)). The ACAS Code provides a non-exhaustive list of examples of improper behaviour here.

For more information about the limitations of protected conversations, see our previous blog post here.

In what circumstances can an employee rely on a ‘protected conversation’ as evidence in proceedings?

This question was recently considered by the Employment Appeal Tribunal (EAT) in Harrison v Aryman Ltd.

The facts

In this case, Ms Harrison resigned in July 2017 and subsequently brought claims against Aryman Ltd for unfair (constructive) dismissal and sex and pregnancy and maternity discrimination.

Ms Harrison’s claim referred to a letter from Aryman Ltd in August 2016, offering to terminate her contract under a settlement agreement. Aryman Ltd argued that the letter could not be admitted as evidence because it constituted a ‘protected conversation’ (s111A). However, Ms Harrison argued that the letter was admissible because although the letter was a ‘protected conversation’ under s111A, the exceptions in s111A(3) and (4) applied; her claim pertained to an automatically unfair dismissal and Aryman Ltd had acted ‘improperly’ in making the offer.  

The Employment Tribunal agreed with Aryman Ltd at a preliminary hearing. However, Ms Harrison appealed. In its judgment, the EAT confirmed the extent to which the tribunal must proactively consider the limitations in s111A(3) and (4) before concluding whether the S111A protection applies and a pre-termination negotiation can benefit from statutory protection.

EAT’s conclusions

1. If it is alleged that evidence of a protected conversation should be admissible because the employee was dismissed for an automatically unfair reason.
   
   Provided the employee’s claim is formulated in such terms, the pre-termination negotiations will not be protected and can be used as evidence, without the tribunal having to make a finding of fact beforehand.
   
   
2. If it is alleged that evidence of a protected conversation should be admissible because of improper conduct.
   
   The tribunal must hear evidence and make a finding of fact as to whether there was improper conduct. If the tribunal concludes that there was improper conduct, it will then then consider the extent to which, if at all, it would be just for the pre-termination negotiations to be inadmissible. Importantly, if the employee does not raise improper conduct as an issue, the tribunal is under no obligation to consider whether it applies.

Practical application

This case serves as a cautionary reminder to employers that s111A pre-termination negotiations do not benefit from blanket immunity: there exist certain circumstances in which the substance of the negotiations may be admissible in later proceedings.  

Having said that (and this article isn’t meant to be a pre-Halloween scare fest), there may still be situations where the end of the road has been reached with an employee and a s111A conversation could help lead to an amicable parting of the ways. This may especially be the case in more straightforward situations, particularly where there is no existing dispute between the parties and so the without prejudice rule will not apply. Employers will still need to tread cautiously but if a proper procedure is observed, s111A pre-termination negotiations can be productive, time and cost efficient, and mutually beneficial. 

In particular, and in order to avoid the limitations and exceptions to s111A applying, employers should

• review their internal policies, in line with the ACAS Code of Practice on Settlement Agreements, which can be found here
• carefully assess whether and when it is appropriate to initiate pre-termination negotiations, considering what claims the employee might seek to subsequently bring and establish whether there is a pre-existing dispute
• be clear with the employee at the outset as to the protection you consider the conversation attracts
• don’t neglect your formal ‘open’ process. It may be preferable to commence the initial step(s) in a formal process before initiating a s111A discussion, though avoid any implications about the outcome of the formal process if the employee does not wish to engage in settlement discussions
• handle the negotiation process sensitively, ensuring the employee feels no undue pressure to engage with or accept any settlement offer. Start discussions by asking the employee if they would be willing to explore alternatives to a formal process, rather than just presenting them with a pre-prepared settlement agreement
• set aside a reasonable period of time for the employee to consider the settlement proposals and receive advice (or face the later suggestion that it was handled improperly), and
• stop conversations immediately if the employee is not willing to explore the possibility of a settlement. 

If you require further information about anything covered in this blog, please contact Rachel Nolloth, Genna Morgan, or your usual contact at the firm on +44 (0)20 3375 7000.

This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.

© Farrer & Co LLP, October 2019