The law
Section 111A of the Employment Rights Act 1996 was introduced in 2013, giving employers an opportunity to engage with an employee about the possible termination of their employment on terms agreed between the parties. Unlike "without prejudice" discussions, there was no need for there to be a pre-existing dispute between employer and employee. As long as there was no "impropriety" in the discussions, then an employee would not be able to lead evidence of the discussions or any offer made in a subsequent tribunal claim for unfair dismissal (the protection only applies to ordinary unfair dismissal claims so would not cover, for example a discrimination claim or any automatically unfair dismissal claim). In Gallagher v McKinnon's Auto and Tyres Ltd the employer sought to rely on section 111A when the claimant raised an unfair dismissal claim and sought to bring evidence of the discussions with his employer before the employment tribunal.
Background
The claimant had worked as a branch manager for his employer since 2017. In 2022 he had the bad luck to contract Covid-19 resulting in a two-week absence and shortly thereafter he broke his foot which caused a further absence. During these absences, the employer realised that they didn't need a branch manager. On 1 August, the claimant was invited to what was ostensibly a return-to-work interview, but in fact the employer sought to discuss termination of the claimant's employment for reason of redundancy. He was offered an enhanced payment of £10,000 and it was explained that if the offer was accepted the claimant would be required to sign a settlement agreement. If the claimant declined the offer, then a redundancy procedure would begin. The claimant was given 48 hours to consider his options, ultimately refusing the offer. A redundancy procedure was then undertaken, and the claimant was made redundant on 21 November.
A preliminary hearing was arranged so the tribunal could consider whether the 1 August discussions were protected under section 111A. The employment tribunal found the meeting had been conducted in a reasonable manner (rejecting the claimant's evidence to the contrary on this), and that it was not a foregone conclusion that, if the offer was rejected, the claimant would have been dismissed. The employment judge found both the fact and content of the pre-termination discussions to be protected under section 111A and therefore inadmissible.
The claimant appealed to the EAT but was unsuccessful. In reaching its decision the EAT concluded that: -
- It was not improper behaviour to explain that, if the offer was not accepted, a redundancy consultation would begin. That was not the same thing as telling the claimant if he did not accept the offer he would be dismissed - it was not a foregone conclusion a redundancy procedure would result in dismissal.
- There was no impropriety in only offering the claimant 48 hours to indicate whether he would accept the settlement offer that had been made. This was a verbal offer that would have been followed by written terms in a settlement agreement. The claimant could have accepted the offer, rejected it, or responded with a counter proposal.
- Although the EAT agreed with the employment tribunal that it may not have been fair for the employer to use a discussion labelled as a return-to-work interview as a pretext for raising the possibility of an agreed exit, it was not impropriety to do so.
What can employers take from this?
On a more general point of good housekeeping, this case highlights how important it is to be able to clearly evidence what was discussed. While witness credibility was important for the employment tribunal in coming to its conclusion on the facts of what had happened here, clear, and accurate contemporaneous notes of discussions are worth their weight in gold should the facts of what happened be disputed, all the more so if records are agreed at the time.
The EAT referred on multiple occasions to the Acas Code of Practice on settlement agreements when coming to its conclusions. Tribunals are required to take account of the Code where it is relevant to any question arising in proceedings before them. If intending to undertake pre-termination negotiations with an employee, an employer should ensure that they are well acquainted with the terms of the Code. It deals with not only the process by which a settlement agreement is reached, but also provides examples of improper behaviour including what placing undue pressure on an employee may look like.
Employers should be confident that they can rely on the protection of section 111A in a scenario where a settlement offer is presented as on option alongside a lawful alternative. Care needs to be taken in the presentation. The alternative option presented by the employer here was that a redundancy procedure would be instigated, not that the employee would be made redundant. If the employee had been told that the alternative was that they would be made redundant, then this would likely have resulted in the pre-termination negotiation being deemed to be admissible.
