In 2013, the government introduced a new law to operate alongside the well-established without prejudice principle. Employers are now able to initiate settlement discussions with their employees, with less risk of those conversations being admissible if the matter subsequently goes to tribunal. These conversations are legally known as “pre-termination negotiations” and are also commonly referred to as “protected conversations”.
Practically speaking there is no requirement to explicitly refer to Pre-termination negotiations within a settlement agreement in order to gain the benefit of them, as it will usually be sufficient to simply refer to any settlement discussions within the covering letter accompanying the agreement.
What counts as a Pre-termination negotiation?
Pre-termination negotiations are defined as being “any offer made or discussions held, before the termination of the employment in question, with a view to it being terminated on terms agreed between the employer and the employee” (section 111A(2), Employment Rights Act 1996). It is important to note that there must be an actual offer of settlement made with the intention of coming to agreed terms for a discussion to be classed as a pre-termination negotiation (for further information please refer to the case of Crespigny v Information Security Forum Ltd).
When might a Pre-Termination negotiation not be protected?
Pre-termination negotiations are protected from admissibility in unfair dismissal proceedings unless there has been “improper behaviour” by the Employer. Currently this is a developing area of law, but ACAS gives the following as examples of improper behaviour (albeit this is not an exhaustive list):
• Not giving a reasonable period of time to consider an offer – as a general rule, 10 calendar days should be given to allow the offer to be considered
• A threat to dismiss or begin a disciplinary process against the employee if the offer is not accepted
• Any form of harassing, bullying or intimidating behaviour
• Any form of discrimination
Currently, if an allegation of improper behaviour is made, it is for the tribunal to decide if the employer has acted improperly. If an employer is held to have acted improperly, then the pre-termination negotiations will be admissible in the tribunal to the extent the tribunal considers just.
This protection includes the very fact that pre-termination negotiations have even taken place and not just the details of those negotiations. However unlike the without prejudice rule, pre termination negotiations are only inadmissible in respect of unfair dismissal claims. They are not inadmissible however if a dismissal is automatically unfair or in other types of claims, such as breach of contract claims or discrimination claims, unless they are covered by the without prejudice rule
However, pre-termination discussions are not necessarily inadmissible in regards to costs or expenses. This is intended to mirror the exception to the without prejudice rule, where a party can reserve the right to refer to the communication in an application for costs, by indicating that the communication is “without prejudice save as to costs”.
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