A protected conversation is a term that describes settlement negotiations designed to bring an employee’s contract to an end. A protected conversation doesn’t need to be one actual conversation and can last over a number of days or even longer.
In theory, a protected conversation can be initiated by either the employee or the employer, but the vast majority are started by the employer. It is usually advisable to start such a conversation at a time when, for example, performance management plans are in place against the employee, rather than springing the conversation ‘out of the blue’ as perceived by the employee.
The process generally begins when the manager or HR approaches the employee and asks them if they are willing to take part in a protected conversation. The employee is perfectly free to decline. But if the employee indicates they are willing to engage in such a conversation, then the manager should specify at the outset that what is going to be discussed is “without prejudice” and covered by section 111A of the Employment Rights Act. This is so that the participants can speak freely. It also means that what is said cannot be used in any subsequent unfair dismissal proceedings if the negotiations don’t succeed.
At the meeting the manager will explain their concerns, for instance performance issues, and propose an exit from the business on specific terms with a settlement agreement. There is a fine line to be walked in these conversations. The employer should give the employee enough information to understand the circumstances leading to the offer and the potential consequences if they do not accept. However, the employer should not pressurise the employee or imply that they will be dismissed if they do not accept. Improper conduct, such as harassment, bullying or intimidation can lead to the cloak of confidentiality being lost.
It is highly advisable to stipulate that the employee keep both the existence and content of the settlement discussions confidential. We also recommend that an employer break down any financial terms which it is prepared to pay the employee on exiting the organisation into specific elements, such as notice pay, holiday pay, and an ex gratia compensatory payment. Employers will also need to consider the applicable tax treatment for each element and be mindful of statutory caps.
Assuming agreement is reached on the core terms, then an appropriate settlement agreement should be drawn up reflecting those terms and ensuring that all potentially applicable legal claims are signed away by the employee. Remember that the employee is required to be advised on the settlement agreement, usually by a solicitor, and it is standard for the employer to make provision within the agreement for a contribution to the employee’s legal costs in securing that advice.
If you have any questions on any of the issues mentioned in the above article, please contact Natalia Milne.