Pre-termination negotiations are often entered into by HR or Management when they are attempting to terminate somebody’s employment under a settlement agreement. A settlement agreement is a legally binding document that prevents the employee from bringing certain claims against the company, normally in return for a sum of money. In order to propose an offer of a settlement agreement to an employee, you will need to have a conversation that is ‘off the record’.
There are two types of ‘off the record chat’ that you can have:
1. The first is known as a protected conversation under section 111a of the Employment Rights Act 1996. A protected conversation cannot be disclosed in court or tribunal proceedings that may occur at a later date, however only in relation to claims for unfair dismissal. There does not need to be an existing dispute between the employer and employee when having this conversation however we would never recommend springing a protected conversation on an employee out of the blue.
2. The second type of conversation is a ‘without prejudice’ conversation. Without prejudice is not an employment specific term. A document or conversation is without prejudice in circumstances where the parties are genuinely attempting to settle an existing dispute and therefore, it is not disclosable to the court or tribunal as evidence. This means that when there is a dispute between the employer and employee, the parties can have a without prejudice conversation to try to negotiate a mutual termination of the employment in order to avoid the employee bringing a claim in the employment tribunal.
Unlike protected conversations, the without prejudice rule only applies when there is an existing dispute between the parties, usually this means that the employee has been considering bringing a claim.
Practical steps for protected and without prejudice conversations – what do you actually say to them?
1. The employee needs to be invited to participate in the protected or without prejudice conversation, not simply told that it is happening. Wait for them to say ‘yes’ before continuing talking.
There needs to be intention of both parties that the correspondence is not open and it will be extremely difficult to argue later down the line that there was such intention if the employee refers to the correspondence in a claim or if the employee feels they have been intimidated.
2. The employee should be informed what a protected or without prejudice conversation is before they decide whether or not they want to proceed. If you don’t know how to word this, it is best to have this written down in front of you so that you can read it out correctly and give a copy of the definition to the employee too if necessary.
3. Where there is discrimination, the conversation will not be protected, for example if an employee informs you that they are pregnant and then suddenly you invite them to participate in pre-termination negotiations with the reason being that they are pregnant, this will not be protected.
4. There cannot be any improper behaviour with both types of off the record conversation, for example undue pressure, bullying or simply informing the employee that they will be dismissed if they do not accept your offer of a ‘more favourable’ termination. What you need to do is explain to the employee the circumstances that have led to your decision to make them an offer to terminate their employment under a settlement agreement. For example, you might want to say that given the evidence uncovered during an investigation into an allegation of gross misconduct against them, you have decided to make them an offer to terminate now without the need for a disciplinary hearing. What you are doing here, is assisting them with considering that the alternative option may be worse than accepting a settlement agreement.
5. The timing needs to be right, the purpose of protected and without prejudice correspondence is not for them to be an alternative to the proper internal procedures, such as managing sickness absence or following a grievance procedure. You need to exercise careful judgement when approaching an employee with an offer and ensure that it is not going to undermine your subsequent procedure. For example, if you approach an employee with an offer to terminate however they are not aware that their employment is in any way in danger, it is unlikely that you will get a positive response and they might try to challenge that the conversation is entitled to protection. It would be much more appropriate to enter into pre-termination discussions during a proper process i.e. after they are close to being dismissed under a formal procedure.
6. You should consider whether the employee is in a similar state of mind by assessing whether there is any evidence to show that they no longer want to work there, this can be something as little as hearing on the grapevine that they are looking for a new job. If you make an offer too soon into a dispute when the employee is otherwise very happy with their employment in the company, making an offer can often cause relations to dramatically worsen.
7. Critically, when considering whether the without prejudice rule will afford your correspondence protection, you need to consider whether there is an existing dispute (there does not need to be an existing dispute with protected conversations). This doesn’t need to be that litigation is underway however given the course of negotiations so far, it is within reasonable contemplation that the relationship may become litigious if they can not reach agreement.
8. It is best to go into the conversation with a script to ensure that you remain neutral when proposing an offer. Also, you should always back up any conversation that you have had where an offer was made, with something in writing and give the employee some time away from work to consider the offer. Anything in writing that you intend to be without prejudice should be labelled as such.
How can we help you?
It is always best to get advice when you are planning on entering into pre-termination negotiations with an employee. We can help you to prepare a script for the conversation, prepare offer letters, settlement agreements and also assist with calculating a suitable offer.
For help with any HR or employment law matter call our expert advisors on 0114 3032300 or email [email protected]