Question: I am looking at ways to ‘exit’ a long-serving employee from the business, and would like to have a conversation with him about a Settlement Agreement. I think this will come out of the blue to the employee, as I’ve not previously raised any issues with him. The employee has a disability, although this has nothing to do with my reasons for wanting to terminate his employment.
My concern is that, if the negotiations break down, it is likely he may bring claims in the Employment Tribunal. I want to know how careful I need to be about what I say during any conversations about the Settlement Agreement. Could anything said in the negotiations come back to haunt me if things don’t work out?
Settlement Agreements can be a useful tool for dealing with employee departures – the basic principle is that by signing the Settlement Agreement, the employee is agreeing to waive potential employment claims against you. (You may find our FAQ’s on Settlement Agreements helpful). You are right to give some thought as to whether anything said during the negotiations could be used by the employee if he decides to reject your offer of a Settlement Agreement and takes you to an Employment Tribunal.
Anything said during the negotiations between you and the employee (or in written correspondence) in situations where there is a genuine attempt to settle an existing dispute cannot be put before the courts as evidence in subsequent proceedings – this is known as the Without Prejudice rule. The fact that negotiations have taken place, however, may be admissible.
In your case it appears that there is no existing dispute, as the employee is currently unaware that there are any issues, so the Without Prejudice rule would not apply. In order to address this problem, the concept of “protected conversations” or pre-termination negotiations was introduced by the government in 2013.
Any pre-termination negotiations you have with the employee in situations where there is no existing dispute cannot be used as evidence in an ordinary unfair dismissal claim (unless there has been improper behaviour). This protection applies to the fact that negotiations have taken place, and to any evidence of internal discussions e.g. correspondence between management and HR. A recent case has confirmed that, under the pre-termination negotiation rules, the protection cannot be waived – even if the parties agree.
As mentioned above, this protection only applies where the employee brings a claim for ordinary unfair dismissal, so other claims such as discrimination claims would not be covered. This leaves open the risk that evidence of what was said in settlement discussions with the employee could be used as evidence in relation to a discrimination claim and, if there was no existing dispute, it would not be covered by the Without Prejudice rule either.
So, in answer to your question – yes, it is possible that things said during your negotiations with the employee could come back to haunt you if you are not able to come to an agreement with him and he brings claims against you in the Employment Tribunal. Although any pre-termination negotiations would be “protected conversations” and therefore could not be used as evidence in an unfair dismissal claim, the employee could still refer to them in a discrimination claim. If you could give me more information about the specific situation, I can advise on what the particular risks might be. There may be steps that could be taken which might help to minimise the risks, however, it is always a good idea to take advice before going ahead.
Although labelling something as ‘Without Prejudice’ is not a watertight method of ensuring that the protection will apply, we recommend making it clear to the employee that your conversations are on a Without Prejudice basis. It is also a good idea to make it clear that any offer you make is ‘subject to the terms of a Settlement Agreement’ – i.e. none of the offer will be binding unless and until the Settlement Agreement is signed.
If you would like to talk through a situation you are dealing with, or if you need advice on any aspect of employment law, please contact any member of the Pure Employment Law team (01243 836840 or [email protected]). Where appropriate, we can give expert guidance on what any potential claims may be worth, and on how best to approach a potential Settlement Agreement, including preparing the agreement itself.