Clarity over Pre-termination Discussions

Background

Prior to July 2013 the only form of protection for discussions that took place between an employer and an employee were “without prejudice” discussions. However, these could only be used if there was a pre-existing dispute and the discussion was a genuine attempt to settle that dispute. Furthermore privilege under the without prejudice rule could be waived (accidentally or with consent).

The Enterprise and Regulatory Reform Act 2013 introduced the idea of pre-termination discussions and these are now governed by section 111A of the Employment Rights Act 1996 (S111A). This allowed employers and employees to hold “off the record” discussions without the need of a pre-existing dispute. S111A provides that where an employer and employee are involved in pre-termination talks, these cannot be used in certain tribunal proceedings such as unfair dismissal.  However, S111A does not prevent pre-termination discussions being referred to in claims such as discrimination. At the time S111A was implemented there were a number of unanswered questions such as, does the protection cover the offers made or the fact that a pre-termination discussion took place and how would a tribunal deal with a pre-termination discussion if an employee issued a claim of unfair dismissal and discrimination?

In the case of Faithorn Farrell Timms LLP (FFT) v Bailey the question arose as to the extent that Section 111A applies.

The facts

Mrs Bailey worked as a secretary for FFT until February 2015 when she resigned. Following which she claimed unfair constructive dismissal and sex discrimination. Prior to her resignation she had been involved in pre-termination discussions with FTT and letters had been exchanged which were on a “without prejudice” basis. Ms Baily also raised a grievance and relied on matters which were previously raised in without prejudice correspondence. Ms Bailey then issued tribunal proceedings which referred to her pre-termination discussions with FTT and also the “without prejudice” correspondence.

The question for the tribunal was whether the pre-termination discussions and “without prejudice” correspondence were admissible as evidence.

In the first instance the employment tribunal held that section 111A only applied to the details of the conversation and not the fact that they have occurred therefore this was admissible. They also found that the letters were admissible as it was not solely an unfair dismissal case but also involved a discrimination claim.

Both parties subsequently appealed the decision.

What the EAT says

The EAT held that:

  • S111A extends to the fact that discussions have taken place, not just the details of any offer;
  • The right to non-disclosure cannot be waived. If a party waived their without prejudice privilege this does not mean that privilege under S111A may also be waived;
  • The right can apply to internal employer discussions between HR and managers;
  • The protection is limited in so far as it relates to the unfair dismissal claim and not in relation to any other claim such as discrimination; and
  • S111A will not apply where there has been improper conduct and this is ultimately down to the tribunal to decide based on the facts of each case.

Comments

This ruling is particularly useful for employers as it gives clear guidance that internal discussions between managers regarding any potential settlement offers will also be covered by Section 111A.

The case also makes it clear that a tribunal may consider the pre-termination discussions in a discrimination case but must disregard that information for an unfair dismissal case arising from the same facts.  In practice it may be difficult for a tribunal to ignore such discussions once they have been referred to in the proceedings.

S111A goes further than the without prejudice rule in that it is possible to state in open correspondence that a without prejudice discussion has taken place without the detail of the discussion being disclosed.  However under S111A the parties are not even permitted to make reference to the fact that a pre-termination discussion has taken place. This leads to the practical difficulty of explaining to the tribunal a period of “inactivity” where pre-termination discussions were occurring without disclosing the fact.

For further information on any of the above, please contact the Devonshires Employment Team.

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