‘Protected conversations’ – when can pre-termination settlement negotiations be revealed to an Employment Tribunal?

Protected conversations were introduced back in 2013. They were designed to enable both employers and employees to initiate a confidential discussion about bringing employment to an end without fear of those discussions being revealed in Employment Tribunal (ET) proceedings.

Previously discussions could be (and still can be) carried out on a ‘without prejudice’ basis where there is an existing dispute between the parties and these could be protected by privilege (note, however, that raising a grievance is not necessarily enough to amount to a ‘dispute’). ‘Protected conversations’ were introduced to get round the situation where there is no existing dispute, provided the parties adhere to the rules set out in the legislation and the Acas Code of Practice on Settlement Agreements (the Acas Code).

Despite the provisions having been in place for several years now, there has been very little case law on them. In 2016 we reported on a case which looked at the interplay between the (then) relatively new legislative provisions set out in section 111A of the Employment Rights Act 1996 and the long-standing legal principle of ‘without prejudice’ discussions. Recently, the EAT in the case of Harrison v Aryman Ltd had to consider a case where the individual alleged that the employer had engaged in ‘improper behaviour’ which can, amongst other reasons, prevent the discussions from being ‘protected’ and result in them being admissible before an ET.

The principal question in this case was whether it was enough for the employee to allege that ‘improper behaviour’ had taken place with a brief description of what it was, or whether, if the employer disagrees with the allegation of ‘improper behaviour’, the ET has to make a determination of what the behaviour was, whether it meets the legal definition under s111A, and then, if it does, to what extent the discussions are no longer protected.

It is important to understand that s111A only prevents the discussions being referred to before the ET in a claim for ‘ordinary’ unfair dismissal – not claims for discrimination, breach of contract or automatically unfair dismissals (such as dismissal in connection with whistleblowing, family leave or a flexible working request). ET proceedings might therefore involve some claims which are inadmissible under s111A (e.g. ‘ordinary’ unfair dismissal) but which are brought with other claims that are not inadmissible (e.g. sex discrimination). There may be further complications where discussions are also alleged to be ‘without prejudice’, such as was the context of the 2016 case.

In this case, however, the main question was the extent to which ‘improper behaviour’ had to be considered and determined by the ET. Ms Harrison alleged that she was given a letter in August 2016 suggesting that her employment relationship with Aryman Ltd be brought to an end. She alleged this was a direct result of her announcing her third pregnancy and that she had suffered unfavourable treatment before in relation to pregnancy and being a working mother. The employer on the other hand alleged that the letter expressed concerns about her performance and conduct which it did not feel could be resolved.

Discussions ensued about potential settlement terms, but an agreement was never reached and Ms Harrison resigned eventually in July 2017. She brought claims for discrimination, constructive dismissal, and, albeit somewhat unclearly, automatically unfair dismissal. In a preliminary hearing the Employment Judge expressed the view that Ms Harrison had lost the right to rely on the August 2016 letter as amounting to breach of contract entitling her to resign without notice for constructive dismissal because it was not until nearly a year later that she actually resigned, and also that it may not be possible for her to rely on the letter as the act of discrimination because it was by then significantly beyond the time limit for bringing such a claim. He did not specifically consider the allegation of automatically unfair dismissal. It seemed, although it was not specifically stated at the preliminary hearings, that Ms Harrison was not going to or was not able to use the employer’s letter to support her claim.

Ms Harrison appealed to the Employment Appeal Tribunal (EAT). She argued that the Employment Judge had failed to consider properly whether she could use the August 2016 letter in support of her claim. She asserted that because she was alleging a discriminatory (constructive) dismissal on grounds of her pregnancy, this amounted to an automatically unfair dismissal, meaning that the protection of the employer’s letter under s111A could not apply. She also argued that the ET had failed to consider the other circumstance in which s111A would not apply, namely if there had been ‘improper behaviour’ on the employer’s part.

The EAT accepted that, despite the uncertainty in the initial preliminary hearings, it was Ms Harrison’s case that she had been automatically (constructively) unfairly dismissed. Whilst she had referred primarily to a discrimination claim, one of the potential automatically unfair dismissal claims is where a dismissal takes place in circumstances which relate to pregnancy, childbirth or maternity. Therefore, the protection of s111A could not apply to the employer’s letter in those circumstances. The wording of s111A only says ‘according to the complainant’s case’ – therefore the employee only has to raise the allegation that the dismissal is automatically unfair for the protection to fall away.

The EAT then turned to the question of ‘improper behaviour’. In contrast to an allegation of automatically unfair dismissal, there has to be more than just an assertion by the employee. The ET has to make findings about what behaviour occurred, whether it meets the legal test for ‘improper behaviour’, and if it does, to what extent the ET considers it fair to admit or not admit the evidence.

The EAT considered the Acas Code, which ETs are obliged to take into account if it is relevant. It noted that one of the examples of improper behaviour under the Acas Code is discrimination in relation to any of the protected characteristics under the Equality Act 2010, including sex, pregnancy and maternity discrimination. Ms Harrison had cited the letter as evidence for discriminatory conduct and therefore, in this case, improper behaviour. As a result, her appeal to the EAT succeeded and the claim was referred back to the ET to consider whether the letter could be submitted in evidence despite the employer’s argument that it was protected by s111A. Whether Ms Harrison will actually succeed on the facts given the time lapse between the employer’s letter and her eventual resignation is another matter, but it is possible that she might succeed in establishing a discrimination claim.

Practical points on protected conversations

So what can employers learn from this? So-called protected conversations (pre-termination negotiations) can be a good mechanism for reaching a mutually agreeable parting of the ways, but if employers make use of them they must remember:

• Such a proposal by an employer may be cited before an ET if there is a potential claim for automatically unfair dismissal or discrimination;
• Employers have to act very carefully to avoid the allegation that there is any ‘improper behaviour’ on their part. According to the Acas Code this includes not only discrimination, but harassment, bullying, intimidation, undue pressure (for example not allowing the employee enough time to consider the offer), or suggesting that the employee will be dismissed if they do not agree;
• The best course of action in using such negotiations, particularly in the first conversation/letter, is to emphasise that no decisions have been taken and the employee is free not to engage in any negotiations. It may set out that a disciplinary or performance management process will begin/continue if that is appropriate, but employers must be very careful as to how this is worded to ensure it does not come across as a threat;
• If a claim is made and there is an allegation of ‘improper behaviour’ it will be the ET’s duty to look at the evidence for that, and so employers cannot simply rely on the idea that the negotiations will automatically be protected under s111A. They must be able to show that their actions and processes throughout showed no improper behaviour in order to benefit from the protection under the legislation.

Speak to our Employment Tribunal solicitors for expert advice regarding ‘protected conversations’ or ‘pre-termination negotiations’.