Protected conversations

by DLA Piper

It is a common misconception that simply labelling a meeting or discussion “without prejudice” protects that discussion from future admissibility in legal proceedings. As a legal matter, the “without prejudice” confidentiality rule only applies to without prejudice discussions relating to the resolution of genuine disputes.  There needs to be an existing dispute before the without prejudice rule can be applied.

In many employment situations where an employer is seeking to offer settlement terms to an employee, there may be no existing dispute in the formal sense.  This gives rise to an inherent vulnerability where employers are keen to promote the idea of a settlement.  This has led to some fairly convoluted attempts to establish a dispute before beginning without prejudice discussions, or employers have simply accepted the risk in the hope and expectation that a settlement will ultimately be arrived at.

On 29 July 2013, legislative provisions brought into force a new regime of “protected conversations”.   The legislation is supported by an ACAS Code of Practice.   Compromise agreements were re-named “settlement agreements” on the same date.

The intent behind the new law is to address the difficulties with the existing without prejudice rules.    Under the new rules, evidence of pre-termination negotiations will be inadmissible in unfair dismissal proceedings except that in relation to anything said or done which in the tribunal’s opinion was improper or was connected with improper behaviour, it is inadmissible only to the extent that the tribunal considers just.

However, the new rules have some fairly major shortcomings and should be approached with caution. 

The biggest restriction for employers is that the protection applies to normal unfair dismissal claims only.  If negotiations are unsuccessful and the employee subsequently brings an unfair dismissal claim, then evidence regarding the settlement discussions will be inadmissible. However, if the employee brings another claim, such as discrimination or whistleblowing, or one of the categories of automatically unfair dismissal, evidence of pre-termination negotiations will be admissible. 

Discussions will also be admissible if there has been “improper behaviour” by either party.  The ACAS Code sets out exhaustive guidance on what may constitute improper behaviour which will lead to the confidentiality protection being lost.  This includes harassment; bullying and intimidation; physical assault or threats of assaults; criminal behaviour; victimisation;  discrimination; and undue pressure.

The limitations on the new regime may make it unattractive to employers unless there is little or no risk of a non-unfair dismissal type claim being brought. 

It is also unclear how the protection will operate in practice where the employee brings an unfair dismissal claim and an additional claim, such as discrimination. The tribunal will hear the evidence for the purposes of the discrimination claim, but will have to disregard it for the purposes of the unfair dismissal claim.

The legislation itself does not stipulate any procedure to be applied.  However, the ACAS Code provides guidance on settlement agreements and procedure and Employment Tribunals are likely to have regard to the Code in determining the appropriateness of the employer’s behaviour.

The Code states that parties should be given a reasonable period of time, generally a minimum period of up to 10 calendar days, to consider the terms and receive independent advice. 

The Code also recommends that employees should be permitted to be accompanied at any meeting to discuss settlement.  This is something employers are likely to be reluctant to do.  However, if the employee asks to be accompanied and the employer refuses, this may constitute improper behaviour. 

For the moment, it is unclear how the new law will operate and, as with all new legal concepts, it may require case law to provide clearer guidance on the scope of the regime.

As matters currently stand, the new regime only appears to be of value in respect of employees where there is a very low risk of claims other than unfair dismissal.  The new law is likely to be of little or no assistance in obvious high risk cases, for example when dealing with pregnancy/maternity situations; part-time employees; employees with medical issues and/or dealing with long term sickness absence; employees from minority ethnic groups; where there are obvious gender or age related discrimination issues; where there has been a history of grievances and disputes with the employee which may form the basis of a whistleblowing claim or similar.  For these high risk groups, the normal “without prejudice” rules will continue to apply where there is a genuine existing dispute.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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