Without prejudice & protected conversations

Without prejudice and protected conversations have become an essential part of the HR toolkit, but they have to be used with care to avoid further issues arising.

If you are looking to bring an employee’s contract of employment to an end, you may want to have an off the record chat with a view to agreeing acceptable terms on which to part ways, not least when involving a high-earning employee, or by way of alternative to time-consuming and costly redundancy procedures, especially in the context of large-scale redundancies.

The following article examines the use of confidential conversations in the workplace, including how without prejudice and protected conversations differ and when these types of conversations can, and cannot, be ‘safely’ used and relied on in relation to sensitive and legal matters.

What is a protected conversation in the workplace?

‘Protected conversation’ relates to an off the record chat with an employee in which you can make an offer to that individual to leave your employment on agreed terms without putting you at risk of this conversation being disclosed at a later date in the context of legal proceedings.

Commonly also known as ‘pre-termination negotiations’, the protected conversation provides both employers and employees with an opportunity to explore the possibility of parting ways on mutually agreeable terms in a confidential manner, without running the risk that this conversation will be admissible in any potential unfair dismissal proceedings before a tribunal.

Whilst it is open to either party to initiate a protected conversation, it is typically employers who will take advantage of their application. That said, the use of a protected conversation often benefits both parties, not least where the employee is unhappy in their role and looking to leave their job in any event.

How does a protected conversation differ to ‘without prejudice’?

The legal right to confidentiality when conducting a protected conversation derives from statute, namely, s.111A of the Employment Rights Act (ERA) 1996, whilst the without prejudice common law principle derives from case law.

Under s.111A, any evidence of pre-termination negotiations is inadmissible in any proceedings before an employment tribunal for unfair dismissal. In contrast, the without prejudice principle prevents statements, whether written or oral, made in a genuine attempt to settle an existing dispute, from being put before a court or tribunal as evidence against the interests of the party that made them.

The purpose of the without prejudice principle is to encourage parties to speak freely and frankly during settlement discussions without fear that any concessions made will be construed as admissions, harming their legal position if their workplace dispute is not resolved.

A protected conversation is essentially an extension of this principle, allowing the parties to engage in off the record discussions about terminating their working relationship, even in the absence of any dispute.

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

When can you use protected conversations?

Under the ERA, any evidence of pre-termination negotiations is inadmissible in any proceedings before an employment tribunal for unfair dismissal.

This statutory provision was specifically introduced to provide more flexibility for both parties to use confidential discussions relating to the end of an employment relationship, where any without prejudice confidentiality would not otherwise apply since no dispute had arisen.

In other words, protected conversations run alongside the without prejudice principle, such that even where no workplace dispute exists, the parties can, for example, offer and discuss a settlement agreement knowing the protected conversations could not be used or referred to in any subsequent unfair dismissal claim.

That said, s.111A also applies to offers of a settlement agreement where there is an existing dispute, although the without prejudice principle will also apply. In contrast, however, in situations where there is no existing dispute between the parties, the without prejudice principle cannot apply so reliance will need to be placed on s.111A.

Consequently, most pre-termination settlement negotiations can be treated as confidential, even in circumstances where there is no current workplace dispute, or where one or more of the parties is unaware that there is an employment problem.

Further, during the course of a protected conversation, it is perfectly permissible to explain your reasons for wanting to negotiate the employee’s exit on agreed terms, in other words the reasons that have led to your proposals.

That said, you should not go on to tell the employee that unless your proposals are accepted they will be dismissed or made redundant. In other words, you cannot threaten the employee with terminating their contract under the guise of a protected conversation. This will be treated as improper behaviour that is specifically prohibited under the Act (see below).

How do you conduct a protected conversation?

When conducting a protected conversation, even though the rules are designed to protect you from this discussion being admissible in the context of any unfair dismissal claim, you must still act properly at all times, otherwise run the risk of losing the statutory protection afforded to you by s.111A ERA 1996.

As such, so as to ensure that any pre-termination negotiations remain confidential, there must be no improper behaviour associated with either the offer or discussions relating to the employee’s exit, including any threat to dismiss the employee for refusing to agree to your offer.

In the event that the matter does come before an employment tribunal in a claim for unfair dismissal, and the tribunal finds that there has been improper behaviour, anything said or done in pre-termination negotiations will only be inadmissible as evidence to the extent that the tribunal considers it just.

What constitutes improper behaviour is for a tribunal to decide based on the facts and circumstances of each case, but will include behaviour that would be regarded as unambiguous impropriety under the without prejudice principle.

In addition to any threat of dismissal, this could cover any of the following types of behaviour, although this list is by no means exhaustive:

• All forms of harassment, bullying or intimidation, either through offensive or aggressive words or behaviour
• Physical assault, or even the threat of physical assault, and any other criminal behaviour
• Putting undue pressure on a party, for example, by not giving an employee reasonable time to consider a settlement offer or, as already mentioned, threatening dismissal if a settlement proposal is rejected
• All forms of victimisation
• Any type of discrimination by reason of age, disability, sex, sexual orientation, gender reassignment, pregnancy and maternity, marriage and civil partnership, race, religion or belief.

In the event that you act improperly in any of the ways described above or otherwise, the conversation will no longer be protected by law, either in the context of any unfair dismissal claim or a claim for constructive dismissal where the employee feels forced to resign in consequence of your behaviour.

It is also important to remember that where unlawful discrimination occurs during the course of a protected conversation, this may in itself form the basis of a claim to an employment tribunal.

Are there exceptions to using protected conversations?

Even in the absence of any improper behaviour, the statutory protection afforded by s.111A is not absolute, whereby pre-termination negotiations may still be admissible in the context of certain unfair dismissal proceedings.

In particular, claims that relate to an automatically unfair reason for dismissal such as whistleblowing, union membership or asserting a statutory right are not covered by the confidentiality provisions set out in section 111A.

The statutory protection afforded under the ERA also does not apply to claims made on grounds other than unfair dismissal, such as claims of discrimination, harassment, victimisation or other behaviour prohibited by the Equality Act 2010, nor to claims relating to breach of contract or wrongful dismissal.

In particular, you cannot select an employee for a protected conversation by reason of, for example, their gender, race, religious beliefs, sexual orientation or any other protected characteristic. By way of example, you should not attempt to have a protected conversation with a woman returning from maternity leave, as this will almost always give rise to a claim of maternity discrimination.

Equally, any conversation you seek to have with an employee because they have raised concerns about some form of discrimination will not be protected.

What terms should be agreed during a protected conversation?

When engaging in a protected conversation, employees are not legally obliged to enter into discussions about a possible agreed exit if they do not choose to do so, nor do they have to accept any terms initially proposed to them, where there may be offers and counter-offers from both sides.

Once an offer of a discretionary severance payment or some other form of offer has been made, the employee should be given a reasonable period of time to consider the proposed settlement, although what constitutes a reasonable period will depend on the circumstances of the case. Generally speaking, however, unless agreed otherwise, you should allow a minimum of ten calendar days for an employee to consider the terms and to take independent legal advice.

Where agreement can be achieved, this will need to be based on the basic premise that the employee will waive their rights to bring a claim for unfair dismissal in return for some form of financial payment or other incentive.

However, you will also need to agree various other matters relating to the termination of the individual’s employment, not least exactly when the employee’s contract of employment will be brought to an end and whether they will be required to work any notice period.

Protected conversations and settlement agreements

Having reached an agreement in principal with an employee to terminate their employment on mutually acceptable terms, you will need to draw up a written settlement agreement. This is a legally binding document between the parties designed to settle any claims arising out of the employment relationship.

There are various rules relating to settlement agreements, not least that to be valid and enforceable the agreement must satisfy certain statutory requirements.

To be enforceable, and in accordance with the guidance set out under the Acas Code of Practice, the following conditions must be met:

• The settlement agreement must be in writing
• The agreement must relate to, and specifically state the nature of, the particular complaint that it is intended to cover, ie; unfair dismissal
• The employee must have received advice from a relevant independent adviser on the terms and effect of the proposed agreement, as well as its effect on their ability to pursue a complaint or proceedings for unfair dismissal before an employment tribunal
• The independent adviser must have a current contract of insurance, or professional indemnity insurance, covering the risk of a claim by the employee in respect of loss arising from that advice
• The agreement must identify the adviser
• The agreement must state that the applicable statutory conditions regulating the settlement agreement have been satisfied.

The independent adviser will either need to be a qualified lawyer, a certified and authorised official, a member of an independent trade union, or a certified and authorised advice centre worker. Further, the adviser must not be employed by, acting for, or connected with the employer or their organisation.

It is important to note that failure to follow the statutory Code of Practice does not, in itself, make an employer liable to proceedings, nor will it lead to an adjustment in any compensation award made by an employment tribunal in a claim for unfair dismissal.

However, tribunals will take the Code into account when considering relevant cases. As such, it is imperative that you have regard to the matters set out within this Code. In the event of any uncertainty, you should always seek expert legal advice from a specialist in employment law.

Protected conversation FAQs

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Legal disclaimer

The matters contained in this article are intended to be for general information purposes only. This article does not constitute legal advice, nor is it a complete or authoritative statement of the law, and should not be treated as such. Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its accuracy and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should be sought.