Protected Pre-Termination Negotiations
From Monday 29th July 2013, a new regime of protected conversations has come into force. The idea is that employers can have a straightforward discussion with employees, in which they can make an offer with a view to the employee’s employment being terminated on agreed terms, safe in the knowledge that the employee can’t refer to the discussion in an Employment Tribunal claim. But to what extent can you be sure the discussion will be protected?
The new rules only prevent pre-termination negotiations being disclosed in ordinary unfair dismissal claims. If a claimant merely alleges any other type of claim, whether for automatically unfair dismissal, discrimination etc, the negotiations can be disclosed in Tribunal proceedings. It is therefore simple for a claimant to circumvent the protection given by the new rules, just by raising another type of claim, even if it is unsuccessful.
Pre termination negotiations can also be disclosed to Tribunals where there has been “improper behaviour” by an employer. This exception may arise where an employer puts undue pressure on the employee, such as by not allowing an employee at least 10 calendar days to consider the offer, or the employer states that dismissal is inevitable regardless of the employee’s response to the offer.
It is not “improper behaviour” to merely set out in a neutral manner the reasons leading to the proposed settlement agreement or factually stating alternatives if agreement can’t be reached. For instance, it is open to employers to explain in neutral terms that if the employee does not accept the deal, then they will continue with performance or disciplinary action (as appropriate). The employee must be effectively given a free choice without pressure or threats.
ACAS has issued a Code of Practice regarding pre termination negotiations and settlement agreements. Notably, ACAS recommends that employees be given the right to bring a companion to any meeting to discuss a potential settlement agreement. There is no free standing right to be accompanied here, as there is with disciplinary hearings, but ignore the ACAS Code at your peril; the Employment Tribunal is entitled to take account of an employer’s failure to follow the ACAS Code.
Although pre termination negotiations are, at first sight, perhaps a useful tool, we advise caution before relying on them in isolation. As explained above, the regime only applies in ordinary unfair dismissal cases. No doubt claimants will seek to ensure that they bring other claims not covered by the protections to circumvent the new rules. The usual “without prejudice” rules still apply and have wider application than pre termination negotiations. We do not advise changing your usual practices when approaching employees with a deal as an alternative to going through e.g. disciplinary or performance management procedures. In other words, treat pre negotiations as an additional factor rather than relying on this regime alone.
New cap on unfair dismissal compensation
To date, the unfair dismissal cap on the compensatory award has changed each 1st February. With effect from 2014, the compensation limits will change from 6th April.
The trigger date is when the employee’s “effective date of termination” falls. Any claims brought from now on where the effective date of termination is 29th July 2013 or later will be subject to a cap of either (currently) £74,200 or 52 week’s pay.
Given the median unfair dismissal award of just under £5,000, it is unlikely that the cap would engage in relation to most claims in any event. However, with the new 52 week limit claimants will not be able to use the £74,200 as their starting point.
The new cap may also be helpful in terms of costs applications, since a claimant who insists on negotiating based on the £74,200 cap rather than 52 weeks’ pay, may be regarded as unreasonable and thus made subject to a costs award.
Employment Tribunal Sift
Employment Tribunals are now required to carry out 2 sifts of all claims. A sift is essentially a review of the papers to determine whether the claim should proceed.
An initial sift will be carried out by an Employment Tribunal officer as soon as possible after the claimant’s Claim is received. If the Employment Tribunal officer considers that the Tribunal does not have jurisdiction to hear the Claim; it has not been submitted in a form that can sensibly be responded to; or is otherwise an abuse of process, they will pass it to an Employment Judge. If the Employment Judge agrees with their conclusion, the Claim will be rejected. The Respondent would never know the Claim had been made.
That leaves the claimant with the option of filing a new ET1 in time or submitting representations asking the Employment Judge to reconsider their decision. The Employment Judge can then either make a decision on the paperwork or call the claimant to an oral hearing. Again, at this stage, the Respondent would still not be aware of the Claim.
The second sift occurs as soon as possible after the ET3 Response form has been accepted. The Employment Judge reviews the pleadings and anything else on the file, in order to make a decision as to whether the claim and defence have been properly argued.
If the Employment Judge thinks one or other party has no chance of success, they will write to the parties setting out their view and order that the Claim be dismissed or the Response struck out on a particular date, unless the relevant party sends written submissions explaining why the Claim or Response should not be struck out. If those written submissions persuade the Employment Judge then the Claim or Response stands. If the Employment Judge is not persuaded he may call the parties to an oral hearing which will become a case management discussion if the Claim or Response is still not struck out. Both parties would therefore be best advised to attend these hearings, or they will lose the opportunity to be involved in discussions setting deadlines for the various preparatory steps towards a Hearing.
Owing to the fact that the Employment Judge will also consider any other documents received at the second sift, Respondents would be well advised to include any relevant documents with their ET3. For instance, in a constructive dismissal claim, a resignation letter that makes no reference to the matters that now are said to have led to the claimant’s resignation, would support a defence that the claimant did not resign in response to any alleged breaches. In this way, any “smoking gun” document can now usefully be disclosed to the Employment Tribunal at this early stage.
It is also likely that claimants may write with comments on the Response in order to put such comments before the Employment Judge at the second sift.
Overall, the new sifts will mean significant changes in strategy and preparation of Responses to Claims. Employers ought to consider carefully how best to approach claims in the Employment Tribunal immediately upon receipt – or preferably while a claim is still only a possibility. There is much that can be done to take advantage of the new Employment Tribunal rules. It is also even more important than previously that a full and properly drafted Response is submitted to the Employment Tribunal.
We often say that prevention is better than cure: obtaining advice at the earliest point, before you commit to taking action regarding a problem employee is the safest way to ensure that we can work with you to manage the process and minimise risk.
If you have any queries on the matters raised above contact firstname.lastname@example.org