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Jamie Lawrence


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Off-the-record discussions – useful or useless?


The Government recently introduced section 111A of the Employment Rights Act in order to help companies deal with problem employees by ‘protecting’ some conversations from being used in litigation – effectively allowing the two parties to reach a compromise without it coming back to bite them.

Are these ‘off-the-record’ discussions a useful tool for employers? Or a blessing in disguise? We asked around.

Craig Bennison, Head of Litigation, Empire HR:

The ‘wolf’ in reality is no more than a ‘sheep’ in its effectiveness for employers. Firstly, the ‘protection’ of the conversation only applies when a claim of ‘standard’ unfair dismissal is brought under section 98 Employment Rights Act 1996; meaning that there is no protection where dismissal is an issue in any other claim / sense, for example, when the Unfair Dismissal claimed is that of ‘automatic’ i.e. Asserting a statutory right / Trade Union Rights / Health and safety complaints etc; nor does it give protection where dismissal is alleged to be an act of discrimination.

Secondly, in cases where ‘standard’ unfair dismissal and any other claim are made together, there is a farsical situation, where the Tribunal, hearing both claims together, will not hear evidence about the termination conversation, in so far as it relates to the ‘standard’ unfair dismissal but allow the termination conversation, for the other parts of the claim i.e. Unlawful deduction from wages claims; discrimination; and all other claims. Bearing in mind, that most claims today have Unfair Dismissal and other claims (usually to get round the two year qualifying criteria) then the termination conversation will be ‘in play’ in most cases.

Therefore, it can be seen that with such limited ‘protection’ and strict rules about the terms of its application then the ‘gift’, all beautifully wrapped by the Government is nothing more, that a beautifully wrapped empty box.

Robert Davies, Partner, Dundas & Wilson:

While the idea behind settlement offers in s.111A of the Employment Rights Act 1996 is certainly laudable, it leaves open a large number of questions and exceptions so employers have to tread carefully.

The aim is to make it easier for employers to have confidential discussions with employees about a possible exit, crucially, where no dispute exists between the parties. How does this translate into practice though?

Conversations will not be confidential if there is evidence of improper conduct which includes discrimination and harassment. In addition the section will not apply to automatic unfair dismissal claims or wrongful dismissal. In other words, some of the very issues that an employer would want to maintain as confidential can fall outside that scope which may place an unwary employer on the back foot.

And it is exactly these sorts of messy situations where employers do want to make offers to leave. But before making any offer under s.111A an employer will need to consider whether any of the exceptions could apply to jeopardise the confidentiality of the conversation. Even if no problems are anticipated prior to the conversation, it is not difficult to imagine an employee arguing that the manager's tone during the off the record chat itself amounted to harassment.

If an employer is worried about confidentiality and eager to minimise risk before an exit discussion they should continue to look at whether the common law 'without prejudice' protection may provide a better level of protection. Although this has the disadvantage of requiring a dispute, it does at least apply in a wider set of circumstances. Many off the record discussions happen at a senior level when organisations need a fast turnaround in management. In which case the composition of the exit package may prove to be the practical method of maintaining confidentiality.

Steven Eckett, Senior Employment Lawyer, Bishop & Sewell LLP:

The Government has introduced the concept of confidential and protected discussions with the aim of making such evidence of pre-termination discussions inadmissible in employment tribunal proceedings.  The real aim is to reduce burden and red-tape affecting businesses and to reduce the threat of litigation in the work-place. The Government also hopes that these protected discussions will promote the use of settlement agreements which widely replaced compromise agreements on 29 July 2013.

The concept of protected discussions can be used not only where there is an existing work-place dispute but also to accommodate such discussions even where there is no current dispute.  The problem with this is that if an Employer attempts to enter into such discussions where there is no apparent dispute then this will have the propensity to sour the employment relationship and increase hostility.

However the main problem with these changes as I see it is that the effect will be minimal in that these types of protected discussions are only relevant to ordinary unfair dismissal claims.  They will for example not cover any other types of employment dispute for example discrimination complaints, breach of contract or even automatic unfair dismissals. 

It is therefore my view that the number of businesses that will make use of these protected discussions are going to be minimal and that there will still be a reliance on the usual form of ‘without prejudice’ discussions and the use of replacement settlement agreements to settle most forms of employment dispute in the work-place and to effect an exit strategy.

Leigh Stott, Director of HR, Hunter Adams:

When it comes to employment law it’s best to operate in black and white. Clear boundaries not only protect everyone involved but ensure the proper and necessary steps are taken. When things are ambiguous or grey that’s when our HR alarm bells start ringing.

With regard to ‘off the record’ discussions, this is where the grey comes in.

At first glance, this change in protocol could be welcomed with open arms by managers looking to cut through the red tape and have open and honest discussions with their workforce.  I understand the desire to have the freedom to just say it as it is. I sympathise with managers who feel they must tip-toe around employees, who routinely are under performing, for fear they might end up in a tribunal.

But unfortunately these confidential severance discussions leave too much open to interpretation and do too little to protect either the employer or employee. 

The protected conversation can be discredited if deemed to be ‘improper’.  This is one of the major pitfalls of the changes. Helpfully, the ACAS Code of Practice on Settlement Agreements lists some examples of improper behaviour. This list is not exhaustive and includes all forms of harassment, bullying and intimidation, including through the use of offensive words or aggressive behaviour.

However, depending on the individual, ‘improper’ can cover an entire spectrum of sensitivities. Unfortunately, it will certainly take a few employers to fall foul of the law to begin to understand what actually constitutes ‘improper’ as the case law interpreting the legislations starts to emerge.

The confidential severance discussions can prompt some managers to have a knee jerk reaction. They can see ‘off the record’ conversations as a way to side step what can be seen as the standard lengthy and detailed dismissal process. But they’re lengthy and detailed for a reason. The proper checks and balances are put in place to ensure all available avenues have been explored and the various possible outcomes considered.

What if, on the spur of moment, a manager pulls in an employee to have a confidential discussion? This employee has constantly underperformed, has been afforded extra learning and support and still routinely missed targets. But what if this employee happens to be the only woman in the company? Discrimination litigation could soon follow suit but at present only unfair dismissal claims are potentially covered by protected conversation legislation. One snap judgement could result in an employment tribunal and costly times for an organisation.

Finally, this change in legislation can have a substantial effect on morale. If an employee rejects the deal they’ve been handed in these uninhibited discussions staff morale is sure to take a hit.  Not only is the employee returning to a job they know they’re not wanted for, but fellow staff members could be wary of being pulled into a similar conversation at a moment’s notice.

For now the overarching theme of the confidential severance discussions is the vagueness that accompanies them. If the legislation looks to give employers more freedom it must afford them additional protection. 

The term ‘improper’ should not be left open for interpretation and it shouldn’t take a handful of managers to fall foul of ‘improper’ to eliminate the overwhelming grey area. 

Kirk Tudhope, Partner, Ledingham Chalmers:

The novel element of protected conversations is that if no agreement is reached, no one will be able to rely upon the content of the discussion in any subsequent claim for unfair dismissal. Instead (depending on whether you are Harry Potter or Stalin) they will be shrouded in a cloak of invisibility or written out of history.

Some employers may regard this as a fulfilment of a long cherished desire to have frank discussions with employees without being warned off by interfering HR advisers. 

However, such warnings have been well made given that any suggestion an employer wished rid of an employee could either lead to constructive dismissal claims or suggestions that any subsequent dismissal process was tainted from the outset.  If these concerns were removed the legislation is to be welcomed. 

Most would accept that there are some occasions where a rigid adherence to personnel procedures may not be a business-friendly or even humane way to deal with staff. The uncertainties and stress related to lengthy redundancy consultations and the agonies of unsuccessful performance management are all things which can dent staff morale.

These ‘off the record’ conversations give employers an alternative way to handle these issues. If it works well then there will be an open and honest discussion with the employee walking away with a reasonable severance package while avoiding the black mark of a dismissal. 

But while employers will see the attraction, HR advisers will have concerns about how this will work in practice. For instance what happens if a protected discussion does not secure a departure? Is the employee meant to return to the day job as if nothing had happened?  There is also real uncertainty caused by the fact that the protection can be lost if an employment tribunal regard the discussion as “improper”. Further the protection only relates to unfair dismissal claims. The conversation can still be relied upon in other claims such as breach of contract (and telling staff it may be time to go could easily be a breach) or unlawful discrimination.

What is and is not improper is likely to be particularly contentious. It is all too predictable that an employee representative will take a far wider view as to what is "improper" than any interpretation favoured by employers.

If you are considering recommending protected conversation here are some points to review.

  1. Is there any reasonable prospect of it working or will it simply antagonise an already difficult situation?
  2. Is there any clear evidence which an employee may use to suggest an ulterior motive for the discussion, for instance, a recent disclosure of a serious medical condition?
  3. Would an impartial observer regard the pressure put on the employee as improper? For instance is an employer expressing measured concerns about an employee’s future as opposed to a concluded view?

Sue Kingston, HR Consultant:

HR professionals (employed or freelance) who are dealing with this topic on the coal face are going to be key to its success or failure. The success will come from a job well done in terms of checks and balances when assessing a case and its suitability to apply either formal internal process or an appropriate protected discussion.

Clearly the legal sector will endure impact on their income potential if more cases are solved in this way. However, it cannot be denied that a business has to consider how it invests its time and money to increase turnover and revenue. Risk to reputation and damage limitation have to be factored in. Litigation should be viewed as an investment, but in times of austerity it can be a critical drain on a company’s coffers.

Protected discussions are designed to ease the burden on businesses and the already overstretched tribunals in dealing with spurious or weak claims. It makes sense to simplify the system with a positive and cost effective process.

The failure may come from not having the right checks and balances preceding any decision. It falls to HR professionals to ensure they understand each case thoroughly, have the formal internal process in place as a back up and only then, if appropriate, instigate a realistic protected discussion.

Companies without in-house HR are at most risk of getting it wrong by cutting corners. Taking the right advice is key – if a job is worth doing, then do it properly!

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Jamie Lawrence

Insights Director

Read more from Jamie Lawrence

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