Protected conversations and improper behaviour

Since 2013, an important tool in an employer’s toolbox has been the opportunity to have a “pre-termination negotiation” or “protected conversation” with an employee: an offer or discussion with a view to employment being terminated on terms to be agreed between employer and employee.

Such a discussion will often arise in the context of conduct or performance concerns, grievances, or redundancy discussions, with the employer giving the employee the option of going through an internal process, or agreeing to exit with agreed termination payments. The conversation will be “off the record” for the purposes of a subsequent unfair dismissal claim brought by the employee (assuming that no agreed departure happens, and the employee is either dismissed or resigns).

So, for example, an employee dismissed for misconduct and claiming unfair dismissal, would not be able to lead evidence about the fact that at an early stage, the employer sought to discuss terms for an exit.

Limits of protection

There are some important limits on this “off the record” protection:

• It only applies to a claim of “normal” unfair dismissal. For any other claim (breach of contract, discrimination, “automatically unfair” dismissal, detriment etc) the claim will be “on the record” and the employee can give evidence about it (unless the “without prejudice” rule applies, which will usually not be the case at the stage that the protected conversation took place)
• If the employer acts improperly, the employee may be able to lead evidence about the protected conversation, in a subsequent ET claim. The ACAS code on Settlement Agreements and pre-termination negotiations suggests that improper behaviour would include:
  • Bullying, threats and intimidation
  • Victimisation and discrimination
  • Putting undue pressure on the employee
  • Saying that if the offer is rejected the employee will be dismissed

Gallagher case

In the recent case of Gallagher v McKinnon’s Auto and Tyres Ltd, consideration was given to whether the employer had acted improperly so as to allow the employee to give evidence about the “protected conversation” as part of his claim that his redundancy dismissal was unfair.

While Mr Gallagher was off sick, the company decided it could manage without him and that therefore his role could be dispensed with and his duties taken on by the directors. At a return to work meeting, he was offered an enhanced termination package of £10,000 if he agreed to sign a Settlement Agreement, and failing that the company would go through a redundancy process. He was asked to give an answer to the proposal within 48 hours; there was then an exchange of messages about how the £10,000 was calculated, but Mr Gallagher did not accept the offer. The company went ahead with a redundancy process and the employee was dismissed.

The Employment Tribunal (“ET”) considered his argument that the company was guilty of impropriety in the way it acted and that therefore Mr Gallagher could give evidence about the “protected conversation”. The ET rejected that argument, finding that the entire discussion was off the record and could not form part of the evidence in the unfair dismissal case. The ET rejected Mr Gallagher’s allegation that the company representatives were aggressive and swore at him, and also did not accept that the company had a draft Settlement Agreement sitting on the table.

EAT decision

Mr Gallagher appealed to the Employment Appeal Tribunal (“EAT”) arguing that the ET had got it wrong on three specific points where it should have found improper conduct:

1. That by telling Mr Gallagher that his role was redundant, the company was telling him that he would be dismissed. The EAT accepted the ET’s distinction – that while the employer may have made a business decision that a role was not needed, that was not the same as deciding that Mr Gallagher would be dismissed at the end of a redundancy process.
2. That the company had lied and arranged a meeting on false pretences – arranging a “return to work” meeting to discuss the employee’s health, when the actual purpose of the meeting was to discuss an exit proposal. The EAT noted that while it might not have been “fair” to spring this discussion on Mr Gallagher, that did not make it improper conduct. The ET had noted that giving an employee advance notice of a “protected conversation” might in itself lead to the employee reacting badly
3. That to give Mr Gallagher only 48 hours to consider the offer put him under “undue pressure”, arguing in particular that the ACAS Code requires the employee to be given 10 days to consider matters. The EAT accepted that the ET was entitled to decide that 48 hours was sufficient – it allowed the Claimant to consult with his family, and he entered into a dialogue with the company about the sums on offer. The 10 days recommended by ACAS applies when the written terms of the Settlement Agreement have been issued, and does not apply to an initial verbal proposal.

Mr Gallagher’s appeal was therefore dismissed. He will continue with his unfair dismissal claim, but evidence about the pre-termination negotiation will be inadmissible.

Learning points

This decision provides support for a number of common employer practices:

• Not giving advance notice that a meeting will include a “protected conversations”
• Asking for an initial response “in principle” within 2-3 days

However, this case does highlight the need to be careful when having a protected conversation and to recognise that an employee can challenge and dispute whether the discussion is truly “off the record”.

To minimise risk and avoid putting the employee under undue pressure:

• Prepare a script, and stick to it
• Don’t have a Settlement Agreement already drafted up
• Allow a few days for the employee’s response and ask them whether they will be able to properly consider the offer within that timeframe
• Emphasise again and again that no decision has been taken about the employee’s employment, and that the outcome of any internal process is unknown
• In a redundancy case, it may be worth stating that the business decision to remove a particular role is subject to consultation, and not set in stone
• The employer should not insist that the employee take time off to consider the offer, though it will generally be helpful if this is agreed
• Ensure that colleagues and customers are not told anything to suggest the employee will be exiting

As ever, expert advice is available from our Employment Law team.

This update contains general information only and does not constitute legal or other professional advice.