Top tips and potential pitfalls: pre-termination negotiations

March 5, 2014

Do you remember the anticipation and excitement in early summer 2012? Whilst everyone was looking forward to the impending Olympics, the government announced that it was going to bring in “protected conversations”. We all hoped that as a result, much of the red tape around dismissing employees would unravel. As you might subsequently recall, the early draft legislation got stuck in the House of Lords, and as a result, in the final version of the legislation the language had changed as had some of the key proposals.

On 29 July 2013, the new regime came into effect and Section 111A was inserted into the Employment Rights Act 1996. The law now refers to “pre-termination negotiations” (rather than protected conversations). More importantly, not only are the conversations are not as “protected” as one might assume, but the process has a fair amount of red tape. Having allowed the new regime a gestational period of nearly nine months, HRlaw is setting out its “top tips” for using the regime as well as highlighting a number of the potential pitfalls.

1.  Starting the conversation

Don’t forget – one of the advantages of the regime is that pre-termination negotiations (PTNs) may be initiated by the employee as well as the employer. If an employee indicates that they would like an off the record conversation you can follow this up in correspondence which references the fact that the negotiations are being conducted pursuant to section 111A of the Employment Rights Act 1996.

Unlike “without prejudice” conversations, no legal “dispute” needs to have arisen prior to a PTN. An unresolved grievance or disciplinary allegation is unlikely to be sufficient to form a “dispute” for the purposes of a without prejudice conversation whereas there is no need to undertake the often difficult task of identifying whether a dispute has arisen when initiating a PTN.

2.  Following the process

The ACAS code on Settlement Agreements also sets out suggested guidance on conducting PTNs. Unlike the code on disciplinary and grievance procedures, there is no potential penalty for failure to comply with the recommended procedure. However, following the procedure does assist in rebutting any potential allegations of “improper behaviour” which is not defined in the statute, and which is yet to be illustrated in any case law, but can result in the loss of the protected status of a PTN.

  • The employee should be given at least 10 calendar days to consider the written terms of any offer of settlement – HR law suggests that this means the full Settlement Agreement and not just headline terms.
  • The employee should be invited to meeting and permitted to bring a work colleague or trade union representative. Practically, many employers are reluctant to do this given that it could mean revealing confidential settlement terms to another member of the workforce. 
  • “Undue pressure” on the employee should be avoided – i.e. giving unreasonable deadlines for completion of the agreement or threatening the termination of the employee’s employment if agreement is not reached.
  • The PTN cannot substitute the open process, so if necessary this should continue at the same time. For example, if a considerable amount of time is spent on a PTN which does not reach settlement, an employer cannot rely on it as a stage of a performance management process or as an early warning.

3.  Keeping the negotiations protected

The legislation provides that the conversations can be admitted as evidence in any claim in which a claimant purports that the reason is one which would make the dismissal automatically unfair e.g. sex discrimination, whistleblowing, trade union membership etc. Whilst an employer can do nothing to stop an employee bringing such claims, even if entirely without merit, it can do the following:

  • Attempt to predict the likelihood of an employee raising such claims (for example, if there has previously been a discrimination complaint by the employee) and consider whether a PTN is appropriate in the circumstances.
  • Ensure that any settlement offer which may be revealed to a tribunal is at an appropriate level, for example not reflective of injury to feelings discrimination compensation.
  • Ensure that nothing is said or put in writing during a PTN which would be significantly prejudicial if it were revealed to a Tribunal e.g. any suggestion that a performance management process is likely to end in the employee’s dismissal.

4.  When to use PTNs

Given the potential pitfalls, HR law advises that the best time to use PTNs is following an employee’s indication that he/she would be interested in pursuing settlement. In the event that an employer wishes to initiate a PTN, it would ideally be in a situation whereif the PTN were to break down, the employer would be happy to follow the normal open process.

Employers should consider reverting to without prejudice negotiations in the event of a situation where PTNs are not appropriate, for example where dismissal is an evitable outcome and/or there is a high risk of a claim where the claimant may assert that the reason for dismissal is automatically unfair e.g. discrimination or whistleblowing.

Romella Manning-Brown is Senior Associate in the Fox Williams Employment Law Department and advises on HR law.


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