Protected Conversations or Without Prejudice?

From 29 July 2013, section 111A Employment Rights Act introduced the principle of confidential negotiations before termination of employment, known as protected conversations.

Section 111A is designed to allow employers to talk freely to their employees (even where there is no dispute in existence) about perceived problems and solutions (including the possibility of termination of employment by agreement). The benefits of a protected conversation is also the added protection it provides which is that the content of such conversations cannot be disclosed in an Employment Tribunal…even if those discussions don’t result in any formal agreement.

Such protection is only offered provided certain criteria are met:-

• The protection only relates to an offer made or discussion held between employer and employee;
• The protection only applies before the termination of the employee’s employment;
• The conversation must be held with a view to the employee’s employment being terminated on the terms agreed between the employer and the employee.

There are, however, significant limitations which questions the effectiveness of such conversations including, in particular:-

• The protection will not apply where there has been improper behaviour or conduct on the employer’s part i.e. bullying, harassment or intimidation.
• The protection only applies to claims of unfair dismissal.

Whilst protected conversations are widely used by employers, the protection only applies to claims of unfair dismissal. If an unfair dismissal claim is being brought alongside another claim, (as is often the case), those pre-termination negotiations specifically relating to the unfair dismissal claim only will be privileged. It is also worth noting that protection conversations do not apply to claims of automatic unfair dismissal which severely limits the usefulness of a protected conversation.

On the contrary, the common law without prejudice rule states that conversations entered into to settle a dispute are “without prejudice” and therefore cannot be used as evidence in any subsequent legal proceedings. The limitation to this rule, however, is that the conversations have to take place with a view to settling an existing dispute…no such requirement is needed for protected conversations.

So, are we better off relying on the old “without prejudice” rule? The simple answer to this is not necessarily. As this note sets out, the difficulty with the without prejudice rule is that whilst it covers an array of claims, it can only be applied in instances to settle an existing dispute.

In summary, there needs to be careful consideration of these types of conversations, along with their limitations, before they are entered into as the ramifications for employers could be huge.

The advice from our employment lawyers is to mark all correspondence of this nature as “without prejudice and subject to contract”, with a limited circulation list and deal with any other issues in open correspondence.