Since 29 July 2013, “Protected Conversations”, or “pre-termination negotiations” as they are sometimes called, have created a new “off the record” forum for employers and employees to have confidential discussions exploring the possibility of parting ways on mutually agreeable terms. There was much debate about whether or not the new regime would provide employers and employees with the flexibility envisaged, particularly given its limitations. Fast forward more than a year and a half after the regime came into force, this article considers our experiences of how it has worked in practice.
What are protected conversations?
In summary, the protected conversations regime provides that evidence relating to protected conversations/pre-termination negotiations will be inadmissible in unfair dismissal proceedings before employment tribunals. Effectively, this is a variation and extension of the existing “Without Prejudice” principle, the key difference being that there is no need for the parties to be in dispute before a protected conversation can be initiated.
The protection is also subject to the concept of “improper behaviour”. That is, if either party engages in “improper behaviour”, evidence of protected conversations will be inadmissible to the extent that the tribunal considers this just. The ACAS Code of Practice on Settlement Agreements (“ACAS Code”) provides a wide-ranging non-exhaustive list of examples that fall into this category.
When might we have a protected conversation?
Perhaps unsurprisingly, we have not seen a huge take-up of protected conversations. Employers are nervous about approaching employees to have a protected conversation if there is any danger of the individual alleging any form of discrimination or whistleblowing – claims that are not covered by the inadmissibility protection. As a result, we have generally found that protected conversations are had with senior level employees in circumstances in which it is strongly felt that the individual in question will be pragmatic and amicable exit terms are likely to be agreed quickly.
Another category of individual with whom the protected conversation route is likely to be used is the white, relatively young, straight, fit, non-religious male (i.e. someone seen as low risk when it comes to a possible discrimination claim, although if employees with such characteristics are always in the firing line, that would of course be discrimination in itself). The circumstances in which we see this approach being used is generally where an individual has been with the company for a relatively short period of time and is either perceived to be not the right fit for the business in question, or is not performing as well as had been hoped.
Are there any other risks?
The concept of “improper behaviour” has also put employers off using protected conversations. As mentioned, the ACAS Code and accompanying guidance provide examples of what is likely to constitute “improper behaviour”, although this is ultimately a point for tribunals to decide. Perhaps the most troubling of the examples given is the idea of putting “undue pressure” on the other party. This is stated to include not giving a reasonable time for consideration of a settlement offer, or any statement by the employer that the employee will be dismissed if he/she does not accept the offer being made. This is a very easy trap to fall into, particularly if the employee asks directly what the consequences would be of rejecting an offer.
Employers generally wish to conclude exit terms as soon as possible and it is common to put time limits on offers that are made. This, however, is a dangerous tactic and could lead to accusations of “undue pressure”, particularly given the statement in the ACAS Code that, as a general rule, employees should be given at least ten calendar days to consider the proposed formal terms of a settlement agreement. Employers prefer to bring matters to a head and avoid delays which can cause unrest in teams. Once an employee is fired there is a clear dispute between the parties and employers can rely on the “without prejudice” rule to protect the content of negotiations, under which they have more freedom to apply time limits on offers and speak more freely.
How do we record the terms of departure?
“Compromise agreements” changed their name to “settlement agreements” at the same time as protected conversations came into force. This, together with the existence of a model form settlement agreement in the ACAS guide, has led to some confusion. People can be forgiven for thinking that settlement agreements can only be used in circumstances where there has been a protected conversation and that compromise agreements are still used for all other negotiated exits. However, this is not correct. Settlement agreements and compromise agreements are the same thing – the Government simply decided that “settlement agreement” sounds better than “compromise agreement” because it suggests a mutual agreement rather than compromise, which some may interpret negatively as compromising their position.
It seems, therefore, that although the Government had the right idea when thinking about protected conversations, what we have in practice is something that does not deliver the simplicity and flexibility all had hoped for and which has not, therefore, fulfilled its potential as a useful management tool.
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