Blog: Protecting your ‘difficult conversations’ with employees – Part 1

Anne-Marie Boyle, Specialist Employment Lawyer at Menzies Law

Invariably, where you have a senior employee who you need to exit, sitting down and talking to them about the benefits of agreeing to leave under an exit deal is the best way to go about it.

Nowadays the law provides us with two different protections to avoid such conversations being thrown back in your face at a later date, if the deal does not materialise and you are then sued by the employee in question.  Both types of protection have some odd aspects and do not always both apply to the same situation, so it’s worth reviewing what they are and how they work.  They are crucial tools for any HR practitioner.

In this two-part blog, I’m going to look at the various legal issues involved when you need to have a difficult conversation with an employee, including:

  • the pro’s and cons of the ‘without prejudice’ and ‘pre-termination negotiations’’ routes
  • how you gain protection from your discussions being referred to in court
  • how you can lose protection
  • how you can plan your difficult conversations to get the best outcomes.

The ‘without prejudice’ conversation

It is easy to think you know all there is to know about having a ‘without prejudice’ conversation with an employee. It is a tried and tested formula: calling an employee into a meeting, explaining that you want to speak ‘without prejudice’ and making some sort of offer (usually for their agreeing to leave). If they don’t take up the offer, they can’t then refer to the fact that you tried to move them on if they then bring legal proceedings.  The ‘without prejudice’ regime is part of the common law, which basically means it isn’t written down in any legislation and has been around for ever.

The problem, however, has always been that peppering a conversation, letter or email with the words ‘without prejudice’ does not actually give the protection that many people think it does. In order for the ‘without prejudice’ rule to apply, there must actually be a dispute between the parties and also the ‘without prejudice’ discussion must be a negotiation that is attempting to settle that dispute.  Furthermore, the cloak of without prejudice cannot be used to conceal ‘unambiguous impropriety’ (posh legal speak for not using it as an excuse to act in a dodgy way by victimising, threatening, bullying or being discriminatory towards the other person).

There must be a ‘dispute’

If you think about it, how many ‘off the record’ conversations have you had where there has been an actual dispute existing at the time? I don’t mean where the employee has made life a bit difficult, or you have decided that the employee is just not performing well enough. These wouldn’t actually count as a ‘dispute’ and any attempted ‘without prejudice’ communications in this situation would not protected and could be used by the employee in quite a prejudicial way (pun entirely intended) if negotiations were to break down.

What then is a ‘dispute’? Actually, it is not that easy to be sure. At one end of the spectrum, a tub-thumping letter from a solicitor instructed by the employee, setting out clearly the legal claims they have against their employer and what they will do about them if a settlement cannot be reached is clearly going to amount to a dispute.  At the other end of the spectrum, what about the employee who has queried why they are not getting holiday pay calculated using their guaranteed overtime payments. This would not be classed as a dispute – yet.

And what about this scenario?  An employee raises a grievance about her return from maternity leave. She is invited to attend a meeting at which the employer says “can we talk without prejudice?”, before telling her that her job was no longer viable and suggesting that it would be best for both parties if she agreed to leave in return for a settlement package. The employee refuses  the offer and sues for discrimination. She wants to use this highly prejudicial conversation in her Employment Tribunal case.  Can she?  You would think that the grievance itself would be enough for there to be a dispute between the parties: not so, said the EAT. It found that the employer may have upheld the grievance or dismissed it for reasons acceptable to the employee, meaning that the parties may never have actually been “in dispute” at all. The employee was therefore able to introduce full details of this awkward meeting into her ET claim. You can bet that case got settled quickly after that. Don’t get me wrong, ‘without prejudice’ communications have a big role to play in many types of employment disputes – it’s just that the rule has to be understood and followed properly.

I’ll look at this in more detail in my next blog.

The statutory regime – pre-termination negotiations

But what about those situations where you might want to just ‘test the water’ with a particular employee?  A typical scenario is where an employee’s performance is sporadic: they might respond to subtle warnings, but then performance dips off again. Or the person who is just a nightmare to manage but is very difficult to pin any suitable disciplinary on?  Both these employees might actually want to leave employment but are highly unlikely to approach their employer for fear of what might happen. No doubt you can think of other examples too.

This is where the statutory pre-termination negotiations (or ‘protected conversations’), which was introduced in 2013, comes into its own.

First, here’s the science bit: section 111A of the Employment Rights Act 1996 states that evidence of pre-termination negotiations is inadmissible in any proceedings for ordinary unfair dismissal. ‘Pre-termination negotiations’ are defined as ‘any offer made or discussions held, before the termination of the employment, with a view to it being terminated on terms agreed between the employer and employee’.  Crucially, there is no need for there to be an actual dispute between the parties when using this process.

This statutory regime runs alongside the common law ‘without prejudice’ rule and employers are entitled to use both regimes simultaneously, or pick which suits their purposes better.

We have also seen the first EAT decision on this area, which gives some really helpful clarification. In the recent EAT case  (Faithorn, Farrell Timms LLP v Bailey), it was held that the protection given to settlement negotiations under s.111A covers not only any offers or discussion made, but also extends to any evidence that negotiations have even taken place. This, I think, will give employers more confidence in using this regime – safe in the knowledge that the ET will not be influenced by knowing that the employer was perhaps trying to move the employee on.

It is important to note here that this is better protection than  the ‘without prejudice’ rule, where it is still possible to refer to the fact that negotiations have taken place even if the content of those negotiations cannot be disclosed.

Again – don’t get me wrong – the statutory pre-termination regime has its flaws too. It only offers protection where an employee goes on to bring an ‘ordinary ‘ unfair dismissal claim. As you know, there are an awful lot more employment law claims than just unfair dismissal, including discrimination and whistleblowing. Also, it will not provide protection where there has been ‘improper behaviour’ (probably easier to understand that ‘unambiguous impropriety’ – but still not defined beyond that, so we are all left doing some guesswork).

In my next blog I will set out what I think could or should not amount to improper behaviour. I will also guide you through how to plan your difficult conversations.

If you can’t wait until then and you need to have a difficult conversation with an employee now, – give me a call and I’d be delighted to have a chat.

Anne-Marie Boyle, Specialist Employment Lawyer at Menzies Law