Court Rules Admissibility/Settlement Negotiations

Introduction

The Employment Appeal Tribunal (“the EAT”) has given its first judgment dealing with the admissibility of pre-termination negotiations/protected conversations in employment law.

Obviously from time to time an employer may wish to commence negotiations with an employee (or vice versa) to settle a dispute or to agree the terms of the employee’s exit.  The starting point is that evidence of any such negotiations is admissible in any subsequent litigation/tribunal proceedings.

There are however two possible ways in which the confidentiality of the negotiations can be protected.

The first possible way is under the common law without prejudice rule.  Provided the parties are already in dispute under the without prejudice rule communications are inadmissible as evidence and cannot be made the subject of a disclosure order.   However there does need to be an existing dispute in order for this rule to apply and therefore it often does not apply in employment situations when perhaps an employer is seeking to terminate the employment of an employee before any dispute has arisen.

The second way is under section 111A of the Employment Rights Act 1996.  With section 111A there does not need to be an existing dispute in order for the rule protecting the confidentiality of pre-termination negotiations to apply.  It applies to any offer made or discussions held before termination of employment, with a view to the employment being terminated on terms agreed between the employer and the employee.  However the rule in section 111A only applies to ordinary unfair dismissal claims, whilst the without prejudice rule applies to all types of litigation.  For example the rule under section 111A does not apply to discrimination claims.

The judgment in the EAT case of Faithorn Farrell Timms LLP v Bailey

The judgment in this case is important since it is the first appellate judgment on the scope of section

111A.  The EAT held as follows:-

• The existence of another claim, e.g. a discrimination claim, does not render admissible for all purposes evidence otherwise inadmissible in an unfair dismissal claim under section 111A. In such circumstances the tribunal would allow the evidence to be admitted for one claim, i.e. the discrimination claim, but still treat the evidence as inadmissible for the unfair dismissal claim.
• Section 111A not only applies to the content of any offers made or discussions held, it also renders inadmissible the fact that there has been discussions (and not just the content of the same).

• Section 111A renders inadmissible not simply the discussions between the employer and the employee but also discussions within the employer, such as between different managers or between a manager and a HR adviser. The EAT had noted that it is common for discussions to be reported back to higher management or HR and it would run counter to the purpose of section 111A if evidence of those reports was admissible.
• Since section 111A renders evidence inadmissible, it is then not possible for the parties to agree (either expressly or implicitly) to admit it. In essence the privilege attached by section 111A cannot be waived by the parties either intentionally or unintentionally.

Conclusion

Our head of employment law, Mr Daven Naghen, has commented don the case as follows:-

“I think the most useful point to note from this judgment is that not only are the discussions between the employer and employee in unfair dismissal cases protected by the provisions of section 111A, but also the relevant conversations between different managers or say between a manager and a HR adviser.  This is good for common sense, since I would usually expect such pre-termination negotiations to be the subject of discussions between managers of a business as well as obviously between the business and the employee.  This will give employers some comfort to know that such internal discussions are likely to be protected by the rule under section 111A.”

If you want any advice or guidance on pre-termination negotiations, either as an employer or an employee, then please contact Dav on 01775 722261 or email daven.naghen@maplessolicitors.com or visit our offices or make an appointment at our offices at 23 New Road, Spalding, Lincolnshire, PE11 1DH.