An offer to terminate an employee’s employment contract on agreed terms may be confidential provided the “without prejudice” rule applies or if the offer forms part of a protected conversation under Section 111A of the Employment Rights Act (ERA).
If there is a genuine attempt to settle an existing dispute the “without prejudice” rule applies and the conversation cannot be used as evidence in an Employment Tribunal claim unless there has been fraud, undue influence, or “unambiguous impropriety”.
Similarly, a protected conversation under Section 111A ERA applies even if there is no existing dispute between the employer and employee. However, the protection under this Section only applies to unfair dismissal claims.
The case of Harrison v Aryman illustrates the position. Ms Harrison, having resigned in 2017 went on to claim constructive unfair dismissal as well as sex and pregnancy or maternity discrimination. The claim referred specifically to a letter dated August 2016 headed “Confidential Settlement Proposal” which detailed an offer to terminate the Employee’s employment contract. The Employer argued that the letter was a protected conversation under Section 111A ERA and therefore could not be used as evidence in the claim.
Initially the Employment Tribunal agreed, however the Employee appealed the decision and the Employment Appeal Tribunal confirmed that where an employee claims that the reason for dismissal was automatically unfair, such as pregnancy, the protected conversation can be used as evidence.
This case highlights that although pre-termination negotiations and settlements are useful, they should only be used in appropriate circumstances.
When carrying out protected conversations, employers should carefully consider the provisions of section 111A ERA and the “without prejudice” rules before entering into settlements with employees. As illustrated in the case above such conversations may be used as evidence in court and can therefore be detrimental to an employer if claims are brought against them.
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