Pre-termination negotiations: 5 things HR need to know

It is a fact of working life that situations can arise where an employer, for whatever reason, wants to cut ties with an employee. Sometimes there is an existing dispute involved. Often there is not. Where there is an existing dispute between the employer and the employee then the ‘without prejudice’ rule steps in to protect any discussions which take place from disclosure, with the aim of settling the dispute (so long as there is no unambiguous impropriety by the employer). But what if no dispute has yet arisen? Is there any way that an employer can protect conversations from disclosure in tribunal proceedings?

Yes! – in the form of ‘pre-termination negotiations’. Here are 5 things HR need to know about pre-termination negotiations:

  1. The rule on pre-termination negotiations (often referred to as ‘protected conversations’) is set out in s111A Employment Rights Act 1996 and supported by an Acas Code and accompanying Guidance. Provided there is no ‘improper behaviour’, conversations with an employee about ending their employment on agreed terms will be inadmissible in any flowing ordinary unfair dismissal claim – even where no dispute has arisen.
  1. The protection only applies where the claim brought is ordinary unfair dismissal. It does not prevent disclosure in any flowing automatic unfair dismissal or discrimination claims, for example.
  1. If the rule on pre-termination negotiations is engaged, then both the fact of the conversation and its contents are protected from disclosure.
  1. The rule on pre-termination negotiations stands separately to the concept of ‘without prejudice’. The ‘without prejudice’ rule means that conversations held as a genuine attempt to settle an existing dispute are generally inadmissible in legal proceedings (unless there is shown to have been unambiguous impropriety). For without prejudice, in contrast to pre-termination negotiations, there has to be an existing dispute. If it applies, then it prevents disclosure in all tribunal claims, not just ordinary unfair dismissal.
  1. Employers need to be careful how they go about holding any pre-termination negotiations. If there is improper behaviour then protection from disclosure can be lost. The Acas Code sets out helpful guidance on how to hold these conversations properly and without applying undue pressure.

In the recent case of Gallagher v McKinnon Auto and Tyres, the Employment Appeal Tribunal considered the concept of undue pressure when deciding whether or not pre-termination negotiations should be protected from disclosure. In this case the Claimant, who was a branch manager, was called to what was termed a ‘return to work’ meeting by the Respondent following an absence. At the meeting, he was told ‘off-the-record’ that his role of branch manager was redundant, was offered a settlement agreement and was told that he had 48 hours to consider the offer. The Claimant did not accept the offer and was dismissed for redundancy. He claimed unfair dismissal and wanted to refer to the settlement discussions at tribunal. The employment tribunal held that the conversation formed pre-termination negotiations and there was no improper behaviour – the fact and content of the negotiations was inadmissible.

The Claimant appealed to the EAT, arguing that there was improper behaviour as:

  1. He was told the meeting was a ‘return to work’ meeting and was taken by surprise;
  2. He was only given 48 hours to consider the offer; and
  3. He was told he would be made redundant if the offer was not accepted.

The EAT, dismissing the appeal, held that 1 and 2 did not represent improper behaviour in the circumstances. In respect of 3 the EAT held that it was important to distinguish redundancy situations from disciplinary situations. The Acas Code does state that a form of undue pressure can be telling an employee that, if they do not accept the offer, they will be dismissed. However, this guidance specifically refers to a disciplinary situation. In this case, a redundancy situation had arisen. It was accepted that the Respondent had told the Claimant that his role was redundant. However, this did not mean that dismissal was inevitable as there were still the possibility of alternative employment.

This case is a good example of pre-termination negotiations being protected from disclosure and a reminder to employers that they need to avoid the risk of challenge on the basis of undue pressure.

Members’ of the HR Inner Circle can access our draft script, letters and explanatory flowchart on this issue here: https://members.hrinnercircle.co.uk/the-vault/templates-and-checklists