Employers frequently decide to open negotiations over the termination of employment. For instance, there may be a possible redundancy situation or a performance problem, and the employer may prefer agreeing the termination of employment on mutually acceptable terms to implementing formal procedure. However, such discussions are not without risk.

Many people incorrectly believe that all discussions described as “without prejudice” are off the record. Without prejudice status can prevent discussions being referred to in court but only where there is an existing legal dispute and the dialogue seeks to settle that dispute. This means that even when an employer has identified workplace problems, if a dispute has not yet arisen between the parties, any offer proposing the termination of employment will not have without prejudice status. Consequently, an employee who has sufficient continuous employment can resign and claim constructive unfair dismissal.

This problem was addressed in 2013 when Section 111A of the Employment Rights Act 1996 introduced ‘protected discussions’. These permit discussion about the termination of employment without requiring an existing dispute. The offer and discussions are not admissible in evidence even if the employee goes on to claim unfair dismissal because a termination package could not be agreed.

Discussions are commonly described as protected, but it is vital to remember that protection is only given in limited circumstances and only in respect of unfair dismissal claims (not, for example, breach of contract claims). The discussions do not attract protection if:

• the dismissal would be automatically unfair (for example due to whistleblowing, asserting statutory rights etc.); and
• there is improper behaviour, including but not limited to:
  • harassment, bullying and intimidation, including offensive words or aggressive behaviour;
  • physical assault (threat or actual) or other criminal behaviour;
  • victimisation;
  • discrimination/ harassment; and
  • applying undue pressure, including telling the employee that rejection will mean dismissal or not permitting the employee a reasonable period of time to consider the proposed settlement agreement – usually at least 10 calendar days.

Protected discussions will normally involve a meeting to discuss the proposal. The applicable ACAS Code of Practice states that this meeting should take place at an agreed time and place and the employee should be allowed to be accompanied at the meeting by a companion (work colleague, trade union official or trade union representative). Failing to comply with both requirements risks accusations of improper behaviour.

Any agreement reached will require a settlement agreement (or COT3 agreed through ACAS) if the unfair dismissal claim is to be validly settled – any termination package offered should be conditional upon a satisfactory settlement agreement being entered.

Please listen to our podcast on the subject of settlement agreements for more information about these documents and the terms commonly contained.

If you need to engage in discussions of this nature, it is important that the negotiations are effective and the settlement agreement properly drafted – at TWM, our Employment Law team have the knowledge and experience to advise you.