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EAT gives first judgment on Protected Conversations

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By Patrick Stewart

Following a judgment from the Employment Appeal Tribunal (“EAT”), the protection afforded by s.111A Employment Rights Act 1996 (“ERA”) has been extended. s.111A ERA provides that evidence of any settlement negotiations before termination is inadmissible in unfair dismissal proceedings. The purpose of this legislation is to encourage parties to reach an amicable settlement. The EAT’s interpretation of the legislation has widnened the application of this protection.

The facts which gave rise to the appeal were as follows:  the Claimant, Mrs Bailey brought claims for constructive unfair dismissal and indirect sex discrimination against her employer, Faithorn Farrell Timms LLP (“FFT”), the Respondent. Before her employment was terminated, Mrs Bailey had approached her employer about reaching a financial settlement and negotiations ensued. Mrs Bailey sought to have this correspondence admitted into evidence whilst FFT argued it was inadmissible.

In his judgment Judge Eady assessed the meaning of s.111A. He held that the protection includes not just the content of the negotiations but also the mere fact that they occurred. He also found that this extended to internal discussions about such protected conversations for example between senior management and HR. Finally, Judge Eady established that this protection cannot be waived. Thus protected conversations in an employment context benefit from more protection than without prejudice correspondence.

Judge Eady also looked at the exclusion under s.111A which states that the tribunal can dis-apply the protection when there is ‘improper behaviour’. He found that this was to be interpreted widely, giving employment tribunals more freedom to decide on admissibility questions where there is alleged impropriety.

This decision will impact how employment tribunals address this issue of admissibility when it comes to protected conversations. The effect is perhaps best illustrated through an example. If a Senior Manager enters into negotiations with an employee who has raised a grievance and the same Manager discusses these negotiations with the HR department through internal emails, the fact that negotiations have been taking place AND the emails between HR and the Manager could be held to be inadmissible if the disgruntled employee later brings an unfair dismissal claim against his employer. If the Manager had attempted to threaten the employee into accepting the offer or there had been some unscrupulous behaviour then the tribunal would take a broad view on whether to admit the evidence.

Employers should therefore be mindful of triggering s.111A when entering into settlement negotiations with employees prior to the termination of their employment and when sending internal correspondence which relates to settlement negotiations. Open correspondence should be clearly distinguished from correspondence relating to protected conversations and employers should be careful not to fall foul of the ‘improper behaviour’ exception if they do not want the content to be admitted into evidence.

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