The government is currently looking at ways to try and make life easier for UK employers.
It has doubled the service qualification for protection against unfair dismissal to two years and is either consulting on other possible legal changes or is pushing them through the legislative process.
One initiative that looks likely to hit the statute book, however, is the “protected conversation”. This creature has had relatively little publicity, but is something to watch out for. It forms part of the Enterprise and Regulatory Reform Bill, which is currently going through the Committee review stage.
The idea behind protected conversations is that employers are able to talk to their employees about possible termination deals or severance packages without having to worry about those conversations being referred to in subsequent tribunal cases should the discussions come to nothing and a claim is subsequently lodged for unfair dismissal.
Such claims could arise in two distinct scenarios. The first is where a staff member, following a protected conversation, refuses to enter into a compromise agreement, is subsequently dismissed and brings an unfair dismissal claim based on that dismissal.
Under the proposed legislation, the tribunal would not be permitted, either when considering if the dismissal was unfair or deciding on how much compensation should be awarded if it were unfair, to take into account whether the employer made a settlement offer to the employee before dismissing them.
In reality, protected conversations will not make much difference in this situation because tribunals currently attach little or no importance to employers’ attempts to resolve issues informally, even if they forget to preface such discussions with phrases like “without prejudice” or “off the record”.
The second scenario is where a staff member refuses to sign a compromise agreement and, because of what was said to them during the protected conversation, resigns and claims constructive/unfair dismissal.
Again, under the proposed legislation, the tribunal would not be permitted, when considering whether the employee was constructively dismissed, to take into account anything that was said during the protected conversation.
This would, in most cases, fatally undermine the constructive dismissal argument and cause the unfair dismissal claim to fail. In this situation, the use of protected conversations could be of great value to employers, particularly those lacking the know-how or resources to deal competently with compromise agreement terminations.
As the law presently stands, an employer who decides to go down the compromise agreement route with a member of staff has to tread very carefully. The difficulty is that, once you start discussing someone’s possible departure and the terms on which they might go, it is very hard to reverse out of the process.
If the employee refuses to engage, the outcome is always likely to be bad for you. You may have to pay over the odds to get them to sign a compromise agreement. Alternatively, you may be left with a disgruntled worker who decides to stick it out and fight for their job, even though they know that they are no longer wanted.
Major health warning
Worst of all, they may argue that you have made their position untenable, resign and claim substantial compensation for constructive/unfair dismissal.
Despite these risks, it is fair to say that, if a negotiated termination is planned carefully and handled with skill, and the amount on offer is realistic, it is likely that the compromise agreement will go through smoothly.
Protected conversations are intended to promote greater use of compromise agreements (or “settlement agreements” as they are now to be called). The idea is that employers, by offering severance terms during the course of a protected conversation, will not have to tread as carefully as they do now.
While this may sound very attractive, protected conversations will need to come with a major health warning. The problem is that, although they may make it easier for employers to persuade employees to accept severance terms and sign settlement agreements, they could also encourage them to over-step the mark.
Emboldened by this new mechanism, employers could end up being too casual in the way that they talk to personnel during protected conversations and say things that would make it impossible for the employment relationship to continue if no deal were done.
They might even think that they could get away with offering their employees completely unrealistic deals.
If they fell into any of these traps, employers could find themselves with embittered workers who refuse to sign and, knowing that they are no longer wanted, become more of a headache (in terms of under-performance, long-term sickness absence, etc.) than they were before the abortive discussions took place.
Another problem is that, while a protected conversation may not spark off a constructive/unfair dismissal claim, it could prompt a discrimination claim.
This is because, if the employee were to complain to a tribunal of discrimination due to their age or race for instance, they would be allowed to give evidence based on what their employer said during the dialogue in question.
This scenario would take place even if the employer had made it perfectly clear at the time that it was to be a “protected conversation”. What employers say to their workers during such discussions could, therefore, still come back to haunt them.
The probable upshot of all of this is that protected conversations, if they are to be successful, will need to be conducted with just as much planning, care and expertise as equivalent dialogues today.
Therefore, if employers are already well-organised and currently handle compromise agreement terminations competently, protected conversations will have little impact on them one way or the other. For less well-resourced employers, however, such conversations could prove extremely welcome, provided their limitations are understood.
One final word of warning though: once the legislation has been passed, it will probably not be long before employers can start applying it so caution should be exercised.