Admissibility of pre-termination negotiations

Are settlement discussions admissible in unfair dismissal proceedings?

This was a question that the Employment Appeal Tribunal recently considered.

Background

The Claimant was employed as a branch manager for almost five years. While he was on sick leave in 2022, his duties were covered by the directors. His employer decided that his role was no longer required.

At a meeting to discuss his return to work, the employer offered him an exit package instead.  The Claimant was told a settlement agreement would be signed if he accepted the offer. If he rejected it, then they would go through a redundancy procedure. He was given 48 hours to consider the proposal. After the meeting, the Claimant was given a breakdown of the offer.

When he did not respond within 48 hours, the Claimant was invited to a formal meeting to discuss potential redundancy and the possibility of suitable alternative employment.

The Claimant was dismissed and brought a claim to the Employment Tribunal (ET). It was held that both the fact and content of pre-termination negotiations were inadmissible.

Employment Appeal Tribunal (EAT)

The Claimant appealed, contending:

• The ET was incorrect in failing to find improper behaviour
• The initial meeting was set up under false pretences
• Forty-eight hours to respond to the settlement proposal constituted undue pressure.

On the first ground of appeal, the EAT rejected the Claimant’s submission that it was proposed to him that dismissal would result if he did not accept the offer and concluded there was no evidence of improper behaviour. On the second ground of appeal, the EAT stated even though it was not fair to use a discussion about the Claimant’s return to work as a pretext for raising the possibility of severance on agreed terms, it didn’t constitute impropriety. On the third ground of appeal, the EAT found the Claimant was not subject to any undue pressure as the meeting was conducted calmly and he had time to discuss matters with his family.

Dismissing the appeal on all grounds, the EAT referred the matter back to the ET to determine the unfair dismissal on the admissible evidence.

Comment

Confidentiality of pre-termination negotiations in ordinary unfair dismissal claims is guaranteed, provided there is no improper behaviour. This allows employers to make an offer to end an employment relationship under a settlement agreement, and these negotiations cannot be used as evidence in an unfair dismissal claim.

Employers should take into account the ACAS Code of Practice on Settlement Agreements when making such offers, including:

• Giving reasons for the proposal when it is made
• Providing the employee with a reasonable period to consider the proposal
• Discussing proposals face-to-face
• Consider allowing the employee to be accompanied at the meeting

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