Settlement negotiations: Employment Appeal Tribunal clarifies rules on “protected conversations”

There are various situations where a university might want to enter settlement discussions with a member of staff, for example where there are shortcomings in the employee's conduct or performance. It will often be commercially beneficial to do so, instead of going through lengthy capability or disciplinary proceedings, with the risk of litigation and in some cases negative publicity.

The rules on “protected conversations” under section 111A of the Employment Rights Act 1996 allow employers to enter confidential settlement discussions, even where there is no employment dispute, without having to disclose those negotiations in subsequent legal proceedings. This can be a useful tool for universities in the right circumstances, but does have its limitations. Importantly, the rules only apply to "ordinary" unfair dismissal proceedings. They do not apply to automatically unfair dismissal claims (for example, whistleblowing), or any other claim such as discrimination, harassment, victimisation or breach of contract. There is also an exception where the employer engages in “improper behaviour”.

The ACAS Code of Practice on Settlement Agreements sets out a non-exhaustive list of examples of “improper behaviour”, including:

• All forms of victimisation, harassment, bullying and intimidation;
• Discrimination because of a protected characteristic;
• Putting undue pressure on a party, such as
• not giving a reasonable time for consideration of a proposed settlement agreement (the Code suggests 10 days as the minimum period for considering formal terms and getting the required legal advice); and
• an employer saying before any form of disciplinary process has begun that, if a settlement proposal is rejected, then the employee will be dismissed.

In a recent case, Tarbuc v Martello Piling Ltd, the Employment Appeal Tribunal (EAT) held that an employment tribunal had misapplied section 111A by excluding evidence relating to pre-termination negotiations and had also erred in its approach to whether there had been improper conduct.

Facts

Mr Tarbuc, who was employed by Martello Piling Ltd (MPL), was invited to a meeting described as a “protected conversation” by the company’s managing director.  Mr Tarbuc alleged that MPL had threatened him with redundancy if he declined a settlement offer. He also complained that the meeting was arranged without prior warning, that he was not given the chance to bring a companion, and that he was allowed only five days to consider the proposed terms.

After his dismissal, Mr Tarbuc brought claims of unfair dismissal, unlawful deductions from wages, and less favourable treatment as a part-time worker.

The employment tribunal concluded that section 111A applied, that MPL’s conduct did not amount to improper behaviour, and that all references to the protected conversation should be removed from the evidence and the pleadings. Mr Tarbuc appealed.

Decision

The EAT partially upheld the appeal, confirming that section 111A renders pre-termination negotiations inadmissible only in ordinary unfair dismissal proceedings.

The tribunal was also found to have taken an incorrect approach when considering whether there had been improper conduct. The tribunal had focused solely on what the managing director had said during the meeting and the manner in which it was said. It had failed to take into account the wider context of how the meeting had been arranged or the fact that Mr Tarbuc had not been allowed to bring a companion.

The EAT also highlighted the need to consider, in context, the time allowed for an employee to respond to a settlement offer. As Mr Tarbuc had rejected the offer during the meeting itself, the subsequent five-day period referred to in the letter did not place additional pressure on him or amount to improper conduct.

The case was remitted to a newly constituted tribunal to consider the issue of improper behaviour.

What this means for universities

This case is a useful reminder to universities that section 111A protection applies only to “ordinary” unfair dismissal claims and that evidence of such discussions may be admissible in other claims based on the same facts.  Discussions should always be conducted on the basis that anything said could be put before a tribunal.

Universities should also consider carefully how the meeting is organised and conducted. For example:

• Avoid “ambushing” the employee by giving reasonable notice
• Make it clear that the employee is under no obligation to take part in the conversation
• Allow the employee to be accompanied if they wish
• Do not use aggressive or intimidating language or behaviour
• Do not tell the employee they will be dismissed if they reject the offer
• Ensure the employee has reasonable time to consider the settlement offer
• Follow up verbal conversations with written documentation outlining the proposal as confidential and protected
• Ensure managers conducting protected conversations receive appropriate training

Shakespeare Martineau

Tom Long, Partner

Tom.long@shma.co.uk

Susannah Nicholas, Professional Support Lawyer

Susannah.nicholas@shma.co.uk

Important information

This article provides general guidance only and should not be treated as legal advice.