Confidential discussions about an employee’s performance have to be handled carefully – or could backfire. Employment lawyer Ann Bevitt looks at the issues.
As an employer, you may sometimes want to talk to your employees "off the record". For example, you may have an employee who has been performing poorly recently. Ideally, you do not want to go through any performance improvement procedure but you are prepared to pay him to leave. You decide to have a chat "off the record". If he takes the deal, great.
If he doesn’t, well, you can always follow the correct procedure and no harm done, right? Wrong: in fact, you could land yourself in a lot of trouble.
Trap No.1: Constructive Unfair Dismissal
Make sure that your discussion could not be construed as a threat to dismiss the employee if he does not accept the deal. If you threaten to dismiss an employee if he does not resign then, unless you can establish that you had good grounds for doing so, you will be in breach of the duty to maintain trust and confidence and the employee will be able to resign and claim constructive unfair dismissal.
Trap No.2: Rely on the "without prejudice" rule
Make sure that all conversations are "without prejudice". This means that, as a general rule, “without prejudice” discussions (and other communications such as letters) are privileged and cannot be admitted in evidence in any subsequent proceedings. The thinking behind this rule is that it allows the parties to discuss possible compromises without the threat of any concessions which they may make during such discussions being used in court against them, if they fail to reach agreement.
Trap No.3: …but be aware of its possible limitations
Firstly, for the “without prejudice” rule to apply, there must be a dispute between the parties when the “without prejudice” discussion takes place and the discussion must be a genuine attempt to settle that dispute. Taking our example above, if you have not discussed an employee’s performance with them and don’t know whether they accept your criticisms or not, there can’t be any dispute between you.
Secondly, be mindful of the unequal relationship between you, the powerful employer, and your employee. If you only say that the meeting is “without prejudice” at the start of the meeting, it may be unrealistic to say that the employee has agreed to talk “without prejudice”.
Thirdly, the “without prejudice” rule cannot apply where the exclusion of the evidence would cover up perjury, blackmail or other unambiguous impropriety. Recent caselaw has held that remarks which were alleged to be discriminatory could not be excluded from the admissible evidence by the “without prejudice” rule.
Conclusion
So where does that leave the employer in our example above? An "open" conversation with a “resign or be dismissed” ultimatum would allow the employee to claim constructive dismissal.
If the poor performance issues have not been put to, and not accepted by, the employee there is no dispute and there can therefore be no “without prejudice” discussion. Even if the discussion is “without prejudice”, the employee will be able to rely on any discriminatory comment made during the discussion in any subsequent claim of discrimination.
The best and safest course of action is to complete the poor performance procedure and only then embark on any “without prejudice” discussion or, at the very least, follow the open procedures concurrently with any “without prejudice” discussions.
Ann Bevitt is a lawyer in the employment team of the London office of Morrison & Foerster. She can be contacted at: abevitt@mofo.com, or by phone on 0207 920 4000.
