Protected Conversations: Employers’ Guide

When dealing with difficult, sensitive or complex workplace disputes, protected conversations can provide valuable opportunities to resolve issues between an employer and employee.

The following practical guide for employers looks at what a protected conversation is and how they can be most effectively used to help reach an agreement.

 

What is a protected conversation?

 

A protected conversation is an ‘off-the-record’ chat between an employer and an employee, typically about ending the employment relationship on mutually agreeable terms. Provided the purpose of the conversation is to explore the possibility of a settlement agreement, anything said by the parties during this discussion cannot usually be used as evidence in the context of any unfair dismissal claim. This is because the conversation(s) will be protected.

Also referred to as ‘pre-termination negotiations’, a protected conversation is a legal mechanism that provides both employers and employees with an opportunity to explore the possibility of amicably parting company in a confidential way. As such, the parties can openly discuss the terms on which the employment contract will come to an end, without putting themselves at risk that this conversation will be disclosed before a tribunal.

It is open to either party to initiate a protected conversation. However, it is employers who will typically take advantage of the protection afforded by these types of conversation, with a view to reaching a settlement agreement and minimising any risks around termination.

 

What does the law say about protected conversations?

 

The law relating to protected conversations is set out under section 111A of the Employment Rights Act (ERA) 1996, where subsection (1) provides that evidence of pre-termination negotiations will be inadmissible in any proceedings pursued under section 111. Section 111 of the ERA 1996 refers to any complaint to an employment tribunal against an employer by an employee that they were unfairly dismissed.

Pre-termination negotiations are defined under subsection (2) of section 111A as any offer made or discussions held before the termination of employment, with a view to that employment being terminated on terms agreed between the parties.

 

When can an employer request a protected conversation?

 

A protected conservation can provide the employer with the ideal opportunity to discuss with an employee the terms upon which that individual’s employment contract may be terminated. This can be a useful tool in a number of scenarios, including when ending the employment contract of a high-earning employee, where there are issues of misconduct or poor performance in relation to a longstanding employee, or even in the context of redundancies. In this way, the employer should be afforded the protection of a confidential discussion that cannot be disclosed in any tribunal proceedings if an agreement as to an employee’s departure from the organisation cannot be reached.

Section 111A of the ERA was introduced to allow greater flexibility in the use of confidential discussions as a means of ending an employment relationship, where the common law ‘without prejudice’ principle does not apply where there is no existing dispute between the employer and employee. In this way, the statutory right to confidentiality in the context of protected conversations runs alongside the ‘without prejudice’ principle such that, even where no workplace dispute exists, the parties may still discuss terms of settlement, safe in the knowledge that any discussion cannot be used in legal proceedings.

However, section 111A can also apply to offers of a settlement agreement against the background of an existing dispute, in conjunction with the ‘without prejudice’ principle. This means that most pre-termination negotiations can be treated as confidential, even in circumstances where there is no current workplace dispute, including where the employee is unaware of any issue with their employment when discussions first take place.

 

How do protected conversations differ to without prejudice discussions?

 

Protected conversations and without prejudice discussions are two different legal concepts, where it is important for employers to understand the difference between the two.

First and foremost, when conducting a ‘protected conversation’, the statutory right to confidentiality is set out under the ERA, while the ‘without prejudice’ common law principle derives from case-law. Under s.111A of the ERA, evidence of pre-termination negotiations will be inadmissible in any proceedings before an employment tribunal for unfair dismissal. In contrast, the ‘without prejudice’ principle will prevent any written or oral statements, made in a genuine attempt to settle an existing workplace dispute, from being put before a court or tribunal as evidence against the interests of the party that made them.

The primary purpose of the ‘without prejudice’ principle is to encourage parties to speak openly during settlement discussions without fear that concessions made will be taken as admissions of liability for any alleged wrongdoing, thereby harming their legal position if a workplace dispute is not resolved. The protected conversation is a statutory extension of this common law principle, allowing the parties to engage in off-the-record discussions about amicably terminating the employment relationship in the absence of any dispute.

In circumstances where agreement cannot be reached, and the employee is dismissed, the content of any discussions or correspondence to attempt settlement of any unfair dismissal claim without recourse to legal proceedings can still be labelled as ‘without prejudice’.

 

What exceptions are there to using protected conversations?

 

By virtue of s.111A of the ERA, any evidence of pre-termination negotiations is inadmissible in any proceedings before an employment tribunal for unfair dismissal. However, there are certain exceptions that may apply, where the statutory protection afforded by the ERA is not absolute. This means that discussions may still be admissible in certain proceedings.

In particular, any claim that relates to an automatically unfair reason for dismissal will not be covered by the confidentiality provisions set out under section 111A. This could include, for example, an employee being involved in whistleblowing or union membership, or where asserting a statutory right, such as being on maternity leave or taking family leave.

The statutory protection afforded to the parties in the context of pre-termination negotiations also only applies to unfair dismissal claims, and not to claims made on grounds other than unfair dismissal. This means that any claim for breach of contract, including wrongful dismissal, will not be covered. This also means that claims for unlawful discrimination, or any other conduct prohibited by the Equality Act 2010, are not covered.

Additionally, if an employee is specifically selected for a protected conversation by reason of a protected characteristic under the 2010 Act this could, of itself, give rise to a claim of unlawful discrimination. The protected characteristics as set out under the Equality Act include age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race, religion or belief, as well as sex or sexual orientation. As such, if an employer selected a female employee for a protected conversation returning from maternity leave, this could easily give rise to a tribunal claim for unlawful maternity discrimination.

 

How should the employer lead a protected conversation?

 

When it comes to how a protected conversation should be led by the employer, it is important for employers to understand the way in which protected conversations can safely be used, ensuring that what they say cannot be held against them if a claim were issued.

When conducting a protected conversation, the legislative provisions are designed to protect the parties from this discussion being admissible in the context of any unfair dismissal claim. Still, the employer must act ‘properly’ at all times, otherwise run the risk of losing the statutory protection afforded by section 111A of the ERA.

Under subsection 4, in relation to anything said or done which in the tribunal’s opinion was ‘improper’, either around the offer or discussions relating to the employee’s exit, the statutory right to confidentiality will only apply to the extent that the tribunal considers this just. If a complaint of unfair dismissal is lodged, what constitutes improper behaviour is for a tribunal to decide based on the facts of each individual case, but can include:

 

• harassing, bullying and intimidating the employee, for example, through the use of offensive words or aggressive conduct
• unlawfully discriminating against or victimising the employee by reason of any one of the protected characteristics as set out under the Equality Act 2010
• putting unfair pressure on an employee, such as not giving them reasonable time to consider a settlement offer or threatening dismissal if a settlement proposal is rejected.

 

An employer can explain their reasons for wanting to negotiate the employee’s exit on agreed terms during the course of a protected conversation, but the employee should not be told that unless any offer is accepted this will result in their dismissal, as this would be ‘improper behaviour’ prohibited under the ERA. Employers essentially cannot threaten their employees with terminating their employment under the guise of a protected conversation.

 

What if an employee requests a protected conversation?

 

When an employer leads a conversation about the employee’s exit on agreed terms, employees are not legally obligated to enter into any pre-termination negotiations if they do not wish to do so. Equally, the employee is not obligated to accept any terms offered.

Conversely, even though the employer is not strictly obligated to enter into discussions where an employee requests a protected conversation, nor to accept any offer(s) made, any hasty refusal could easily result in the employer defending a tribunal claim. If the employee is instigating a possible exit on agreed terms, it can often be best to at least listen to what they have to say and consider any sensible proposals so as to minimise the risk of a claim, including for constructive (unfair) dismissal, where an employee feels forced to resign.

 

How many protected conversations can take place?

 

It is not uncommon for the terms on which an employee’s agreed exit may take place to be discussed over the course of two or more conversations, where there may be offers and counter-offers from both sides. Provided these conversations are not excepted under the rules around protected conversations, and there is no improper behaviour which could undermine the right to confidentiality, there can be several conversations, if needed.

Once an offer has been made by the employer, where this could include a discretionary severance payment or some other form of offer, the employee should be given a reasonable period of time to consider the proposed terms of settlement. The question of what constitutes a reasonable period will depend on the circumstances of the case. Generally speaking, unless the parties agree otherwise, employers should allow at least 10 calendar days for an employee to consider the terms and to take independent legal advice.

 

How do protected conversations lead to settlement agreements?

 

If agreement can be reached between the employer and employee as to the terms of the employee’s exit, this will need to be on the basis that the employee waives their right to bring a claim for unfair dismissal in return for some form of financial payment or other incentive. There are also additional matters that will need to be agreed, including the effective date of termination and whether the employee is required to work any notice.

All these terms will need to be agreed in principle before being recorded in a written settlement agreement. A settlement agreement is a legally binding document between the parties designed to formally settle any claims arising out of the employment relationship.

However, there are various strict rules relating to settlement agreements to ensure that an agreement is valid. In particular, for a settlement agreement to be legally enforceable, the employee must seek independent legal advice on the terms and effect of the proposed agreement before signing. The person providing that advice must also not be employed by, or acting for or connected with, the employer or the employer’s organisation.

Guidance on the use of settlements agreements in the context of protected conversations can be found in the Acas Code of Practice. This should be closely followed by employers, and although any failure to follow this Code does not, of itself, make an employer liable to unfair dismissal proceedings, a tribunal may take the Code into account in relevant cases.

In the event of any uncertainty, advice should always be sought from an employment law specialist, both prior to entering into any discussions and around drafting any settlement.

 

Need assistance?

 

For guidance or support when dealing with workplace disputes, including the use of protected conversations, contact us.

 

Protected conversations FAQs

 

What is an example of a protected conversation?

An example of a protected conversation is where an employer has an ‘off-the-record’ chat with a senior employee prior to restructuring their organisation and reducing the headcount to see if they can agree terms for that individual to leave quietly.

What are the rules of a protected conversation?

There are various rules when it comes to protected conversations, including that an employer must not behave in an improper way, such as harassing or intimidating an employee into accepting a settlement offer on termination of their employment

What is the difference between a protected conversation and without prejudice?

A ‘protected conversation’ is a statutory right to confidentiality in relation to pre-termination negotiations, while ‘without prejudice’ refers to the common law principle that any genuine attempt to settle an existing workplace dispute cannot be raised in legal proceedings.

What is a protected conversation under section 111A?

Under section 111A of the Employment Rights Act 1996, a protected conversation refers to any offer made, or discussions held, between an employer and employee with a view to employment being terminated between the parties on mutually agreeable terms.

 

Last updated: 29 May 2024