“Protected conversations” were introduced to allow employers to have frank discussions with employees about possible dismissal, by reducing the risk of an unfair dismissal claim. Although the changes came into force in July 2013, there hasn’t been much litigation in this area, which begs the question: are employers making best use of “protected conversations”?

What is a protected conversation?

The introduction of protected conversations was an attempt to make it easier to terminate employees (or at least discuss the possibility of parting ways) in a low-risk environment. This is especially relevant for employees with two years’ service, who are entitled not to be unfairly dismissed; that protection for long-serving employees can make it difficult for employers to get rid of such employees when things aren’t working out (e.g. because of performance issues or a clash of personalities).

It’s worth noting that although we refer to “protected conversations”, the legal protection extends to all pre-termination negotiations however they are conducted (e.g. to any emails, letters, and settlement agreements, not just conversations and discussions).

Section 111A of the Employment Rights Act 1996 governs the use of protected conversations – some of the key points to remember are set out at the end of this blog post.

Are employers using protected conversations?

The lack of litigation in this area could mean either that employers are choosing not to use protected conversations because of the risk, or that the regime is so successful that there are very few claims coming to tribunal. Although there is no data readily available, the reality is probably somewhere in between.

Some employers are cautious because the protection under section 111A does not extend to claims like whistleblowing or discrimination, and therefore there are risks that any negotiations are disclosed and considered by the tribunal anyway. Other employers have found that they are a great way to initiate difficult conversations and bypass the alternatives: long drawn-out performance management plans, grievance processes involving internal politics, or contentious disciplinaries, which are often unattractive, particularly when the outcome is, in reality, a foregone conclusion.

Either way, before deciding to embark on a protected conversation, it’s best to consider the risks and come up with a strategy to keep the process as short as possible (e.g. by preparing a severance package proposal, scripts for meetings, a draft settlement agreement etc. before the conversation takes place).

Points to remember

Although there hasn’t been much discussion in the tribunals of the law around protected conversations, there are some key principles that come through from the cases that have been heard:

• ACAS Code: ACAS have produced a Code of Practice on Settlement Agreements. The Code is not binding, and an employee will not have a claim just because an employer has breached it. However, it’s a good idea to read, understand and follow the Code, as tribunals will still consider it when deciding cases involving section 111A.
• Other claims: The tribunals have acknowledged that where a claimant brings an ordinary unfair dismissal and another (e.g. discrimination) claim, they might need to ignore pre-termination negotiations for the purposes of the former and consider them as part of the latter. There’s a danger that tribunals might inadvertently slip into considering pre-termination negotiations when they shouldn't, but they are well used to tasks like these.
• Timing: Pre-termination negotiations are just that – if exit negotiations continue after termination, the parties will need to rely on ordinary “without prejudice” principles.
• Improper behaviour: If it thinks it “just” to do so, a tribunal can open up the confidential negotiations “in relation to anything said or done which in the tribunal's opinion was improper, or was connected with improper behaviour…”. There’s no definition of “improper behaviour” in section 111A, but the Code suggests it might include:
  - discrimination
  - victimisation
  - harassment
  - putting undue pressure on an employee (e.g. by not giving them 10 days to consider a settlement offer, or telling them that they will be fired if they do not accept the settlement offer).
• Labelling: The tribunals haven’t considered how pre-termination negotiations need to be described in order to remain protected, but it’s likely that the same approach would be taken as under the without prejudice rule, i.e. that the tribunals would look at the reality of whether negotiations fell within section 111A rather than whether (and how) the parties label or describe those negotiations. If in doubt, it’s safest to make clear on any documents or correspondence that section 111A is intended to apply.
• Dismissal: If there is a dispute about when (or if) the employee was dismissed, the tribunal can (and, in some cases, will need to) look at any relevant documents or other evidence to determine these matters as a preliminary issue. This allows the tribunal to work out what it can and cannot consider as part of the unfair dismissal claim.
• Waiver: Confidentiality under section 111A cannot be “waived” like without prejudice privilege, so a tribunal cannot take account of the pre-termination negotiations when deciding if a dismissal was unfair (even if the parties agree that they want it to).