Employers who have experience of attempting to reach a mutual agreement with an employee to terminate their employment will most likely be familiar with the idea of the ‘without prejudice’ (“WP”) conversation.
The purpose of the WP conversation, in this context, is to create scope for parties to discuss and negotiate the proposed terms under which the employee’s employment may be terminated, but in the knowledge that both parties understand that there is little to no risk that the contents of that discussion will be admissible in any proceedings in the Employment Tribunal.
In reality, however, this places the employer in the uncomfortable position of making attempts to craft a carefully constructed conversation where no implication is made that the individual will be dismissed anyway should they reject the proposal of mutual termination. If handled poorly, such a conversation could give an employee reasonable grounds upon which to conclude that their employer wants to part ways with them, come what may, and this could lead to a claim for breach of contract or constructive unfair dismissal.
To assist with the challenges of these conversations, in 2013 the government introduced the statutory framework of “Pre-termination negotiations” at s111A of the Employment Rights Act 1996 (“111A”). This is designed to operate alongside the common law WP principle and to make it easier for the employer to conduct protected conversations.
‘Without prejudice’ versus ‘Pre-termination negotiations’
In contrast to WP discussions, pre-termination negotiations are protected from being admissible regardless as to whether the parties are already in dispute at the time. In the absence of a dispute, the WP privilege will not apply, and so, generally, they will arise at the point when an employee is already potentially facing disciplinary proceedings or formal performance management. A pre-termination negotiation under 111A can arise at any point and so identifying the correct timing and context for the discussion is much less of a minefield for the employer.
The framework is not without its limits. The pre-termination negotiations will only be protected insofar as they relate to matters of unfair dismissal. Conversations pertaining to any other matter, such as discrimination or whistleblowing, are not protected from admissibility. Also anything said or done in the course of the discussion that the tribunal considers to be ‘improper’ will also be admissible.
But to the extent that protection is provided by the framework, this protection is significant, so much so that in the case of Faithorn Farrell Timms LLP v Bailey [2016] IRLR 839 (“Faithorn”) it was held that it was not only the content of the conversations that were inadmissible, but also the mere fact that the conversations took place should not be admitted into the tribunal’s consideration. Equally, also established in Faithorn, the parties themselves cannot choose to waive the protection offered by 111A, even if they agree to do so. Such is the strength of the protection offered by 111A that there is no ‘contracting out’ of it. This is much more robust protection than the principle of WP affords.
Basra v BJSS Ltd
However, what emerged as key in the recent case of Basra v BJSS Ltd [2017] UKEAT 0090_17_1912 (“Basra”) is that in order to enjoy those protections, the conversations negotiating the termination of employment must, as a matter of fact, strictly take place pre-termination. So if the effective date of termination is in dispute, as it was in this case, the question arises as to when the protection begins to apply and also as to which parts of the discussions the tribunal can take into consideration in order to determine a finding on that point.
The Claimant in this case had responded to a WP offer of immediate termination of employment stating that he accepted the offer on a ‘without prejudice and subject to contract’ basis. He went on to write in the same sentence ‘today will be the last day at BJSS’.
Following this “acceptance email” the Claimant did not return to work. Over the following days, the employer proceeded to chase him to return the proposed settlement agreement which outlined the terms of his termination. When he responded, he did so via solicitors who stated that he was off sick.
When his solicitors went on to express an expectation that he would be returning to work when fit to do so, his employer wrote back clarifying their understanding that his employment had already terminated when he sent his “acceptance email”, but that if they were wrong then it certainly terminated later when the employer made it clear that they did not expect him back at work.
The claimant lodged a claim in the employment tribunal for unfair dismissal.
ET and EAT findings
At first instance, the Employment Tribunal (“ET”), interpreting the guidance in Faithorn, determined that they would not hear submissions on the matter of the conversations that had taken place before the termination, because those conversations were protected even from being mentioned. They found the Claimant‘s “acceptance email” to be a result of the pre-termination negotiations, and not part of them, and so they took the view that they could make a determination from that alone as to whether the employee resigned. They found the “acceptance email” to be an unambiguous resignation.
On appeal, the Employment Appeal Tribunal (“EAT”) ruled that the ET had erred in coming to this conclusion. The effective date of termination was clearly a matter of dispute between the parties and so the ET should have heard submissions on all of the pre-termination negotiations insofar as they related to establishing the effective date of termination. Only once this point had been decided could the protection of 111A apply. Those conversations which had taken place prior to the effective date of termination would be protected and those falling after would not.
While increased protection is offered to employers by s111A, it is important still to remember to act with caution. In most cases, the effective date of termination will be agreed by the parties and usually an employee will negotiate and seek full clarity of the terms of the settlement agreement before expressing their acceptance of it. However, if the employee seeks to negotiate the terms further after expressing an apparent acceptance of the offer, the matter of the effective date of termination could be disputed if not clearly established between parties. If the matter is disputed before a tribunal judge and a conversation previously assumed to have been a pre-termination negotiation is found to have taken place post-termination, it will not enjoy the protection afforded by 111A and its contents will be admissible.
If you have any questions on any of the issues raised in the above article, such as how best to conduct a protected conversation, please contact Helen Donnelly at Helen.Donnelly@navigatorlaw.co.uk.