Since July 2013, employers have legally been able to have an off the record discussion with an employee to discuss the idea of terminating their contract of employment. These are able to be done as a protected conversation.
A protection conversation allows for an employer to make an offer and negotiations to take place on that offer, in order to terminate an employee’s contract.
These terms will then be documented in a settlement agreement. If an employee agrees to leave the company under a settlement agreement, there is no risk to the employer of the employee bringing a claim against them, of unfair dismissal or anything else, to an Employment Tribunal.
The conversations are conducted pre-termination and the terms of the settlement are protected, i.e. they cannot be used in any subsequent employment tribunal claim for unfair dismissal.
Protected conversations and the terms of any settlement agreement are covered in section 111A of the Employment Rights Act 1996 (ERA).
What is a settlement agreement?
A settlement agreement is a legally binding contract that is used to end an employee’s employment on agreed terms between the employer and employee. They usually include a payment to the employee and can contain an agreed reference also.
A Settlement Agreement may be offered in many situations, and it is usually when employment is coming to an end, for example to avoid a drawn-out performance, disciplinary or redundancy process, which can often be costly and time-consuming.
For a settlement agreement to be legal the following conditions must be met:
- It must be in writing
- It must relate to a particular complaint or proceedings
- The employee must have had advice from an independent legal advisor
- The agreement must state who the legal advisor is
Requirements for a protected conversation
During the negotiating process, there must not be any ‘improper behaviour”, otherwise the conversation will not be protected and will be inadmissible in an Employment Tribunal.
Improper behaviour means any behaviour that would be seen as unambiguous under the without prejudice rules, for example, perjury, theft or blackmail.
If there is improper behaviour by an employer then anything that is said or done in any pre-termination negotiations will normally be admissible as evidence.
The ACAS Code of Practice – Settlement Agreements (Code) provides a non-exhaustive list of improper conduct, which includes:
- Harassment, bullying and intimidation, including the use of offensive words or aggressive behaviour;
- physical assault or the threat of physical assault and other criminal behaviour;
- all forms of victimisation;
- discrimination due to age, sex, race, disability, sexual orientation, religion or belief, transgender, pregnancy and maternity and marriage or civil partnership;
- putting undue pressure on a party, by not allowing a reasonable time for consideration or saying an employee will be dismissed if the agreement is rejected
Exceptions to a protected conversation
There are some protected conversations that are not covered in section 111A of the ERA these relate to complaints consisting of:
- automatically unfair dismissal, such as whistleblowing, health and safety, union membership or asserting a statutory right;
- discrimination, harassment, victimisation or other treatment prohibited by the Equality Act 2010; and
- breach of contract or wrongful dismissal.
In these circumstances, if there was a live dispute between the employer and employee the without prejudice rule could still apply.
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