- 10 Finsbury Square, London EC2A1AF
- +44 (0) 20 7628 2000
Protected conversations - proceed with caution
When should employers use them?
”Protected conversations”, or “pre-termination negotiations” as they are sometimes called, provide both employers and employees with an off the record forum for confidential discussions to explore the possibility of parting ways on mutually agreeable terms.
What are protected conversations?
In summary, the protected conversations regime provides that evidence relating to protected conversations/pre-termination negotiations will be inadmissible in unfair dismissal proceedings before employment tribunals. Effectively, this is a variation and extension of the existing without prejudice principle (read our article on without prejudice conversations here), the key difference being that there is no need for the parties to be in dispute before a protected conversation can be initiated.
The protection is also subject to the concept of “improper behaviour”. That is, if either party engages in improper behaviour, evidence of protected conversations will be inadmissible to the extent that the tribunal considers this just. The ACAS Code of Practice on Settlement Agreements (“ACAS Code”) provides a wide-ranging non-exhaustive list of examples that fall into this category.
When might a “protected conversation” take place?
Perhaps unsurprisingly, employers are often nervous about approaching employees to have a protected conversation if there is any danger of the individual alleging any form of discrimination or whistleblowing – claims that are not covered by the inadmissibility protection. As a result, protected conversations generally take place with senior level employees in circumstances in which it is strongly felt that the individual in question will be pragmatic and amicable exit terms are likely to be agreed quickly.
Another category of individual with whom the protected conversation route is likely to be used is where the employee is seen as low risk when it comes to a possible discrimination claim. The circumstances in which we see this approach being used is generally where an individual has been with the company for a relatively short period of time (but for more than two years) and is not performing as well as had been hoped. The protected conversation route may help to facilitate a quick exit whilst reducing the risk of an unfair dismissal complaint.
What are the risks?
The concept of improper behaviour also puts employers off using protected conversations. As mentioned, the ACAS Code and accompanying guidance provide examples of what is likely to constitute improper behaviour, although this is ultimately a point for tribunals to decide. Perhaps the most troubling of the examples given is the risk of putting undue pressure on the other party. This is stated to include not giving a reasonable time for consideration of a settlement offer/agreement, or any statement by the employer that the employee will be dismissed if he/she does not accept the offer being made. This is a very easy trap to fall into, particularly if the employee asks directly what the consequences would be of rejecting an offer.
Employers generally wish to conclude exit terms as soon as possible and it is common to put time limits on offers that are made. This, however, is a dangerous tactic and could lead to accusations of undue pressure, particularly given the statement in the ACAS Code that, as a general rule, employees should be given at least ten days to consider the proposed formal terms of a settlement agreement. Employers prefer to bring matters to a head and avoid delays, which can cause disquiet in teams.
Once an employee is dismissed there is a clear dispute between the parties and employers can rely on the without prejudice rule to protect the content of negotiations, under which they have more freedom to apply time limits on offers and speak more freely.
How are the terms of departure recorded?
Following a protected conversation, the terms of departure should usually be recorded in a formal settlement agreement which is a legally binding contract between the employer and the exiting individual. The purpose of a settlement agreement is to confirm that the employee will not bring claims in the employment tribunal or courts against the employer. This confirmation is usually in exchange for some form of financial compensation. Employers should remember that employees are not obliged to enter into settlement agreements and they do not have to accept the terms which are initially proposed. There is often a period of negotiation between parties before an agreement is reached and this can sometimes be an expensive and time consuming process.
Overall it seems that, although the Government had the right idea when introducing protected conversations, what we have in practice is something that does not deliver the simplicity and flexibility all had hoped for. Employers should therefore exercise caution when using protected conversations as a management tool within their organisations, and consider whether it is preferable to explore without prejudice discussions as an alternative route.