The inadmissibility of protected conversations and the terms of any settlement agreement are enshrined in section 111A of the Employment Rights Act 1996 (ERA).
Protected conversations are designed with a view to ending an employee’s employment where there has been no previous dispute or issue with that employee’s conduct, capability or the viability of their role.
Prior to 29 July 2013, employers had sought to have “without prejudice” conversations with employees where there was no dispute surrounding the employees’ employment. The risk employers faced was that if an employee did not agree to the termination of their employment they could in certain circumstances allege that such a conversation was a breach of the implied term of trust and confidence entitling them to resign and claim constructive unfair dismissal. Alternatively, if the employer was to dismiss an employee after a “without prejudice” conversation and after the employer subsequently followed a dismissal process, the employee could bring a claim for unfair dismissal on the basis that the dismissal was predetermined. In such circumstances, the employee would in support of such a claim refer to the “without prejudice” conversation having taken place before the dismissal process started when there was no live dispute.
Note: where there is a live dispute, without prejudice conversations between employer and employer will remain confidential and inadmissible.
For conversations to be “protected” and to retain their confidentiality and inadmissibility in an ET there must not be any “improper behaviour” in the negotiating process. What constitutes improper behaviour is ultimately for an ET to decide on the facts and circumstances of each case. However, improper behaviour will include behaviour that would be regarded as ‘unambiguous impropriety’ under the without prejudice rule (eg fraud, perjury or blackmail). The Acas Code of Practice – Settlement Agreements (Code) provides a non-exhaustive list of improper conduct, which includes:
Where there is improper behaviour by an employer anything said or done in pre-termination negotiations will normally be admissible as evidence.
Certain protected conversations are not covered by section 111A of the ERA that relate to complaints of:
In such situations, the without prejudice rule may still apply if there was a live dispute between employer and employee.
Settlement agreements are legally binding contracts which can be used to end the employment relationship on agreed terms. The main purpose of such an agreement is to prevent employees from exercising their right to make a claim to an ET or court. Settlement agreements usually include some form of payment to the employee by the employer and may also include a reference.
The Code suggests a minimum period of 10 calendar days is offered to employees to consider the proposed terms of a settlement agreement and to receive independent advice (unless the parties agree otherwise).
Settlement agreements are voluntary. An employee is not obliged to enter into a settlement agreement. Equally an employee does not have to accept the terms initially proposed by an employer. There can be a process of negotiation during which both parties make proposals and counter proposals until an agreement is reached, or not, as the case may be.
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