How to hold a pre-termination/without prejudice meeting

This article considers how to hold an off the record meeting to negotiate the termination of an employee’s employment and the key issues employers should look out for when holding such meetings.

Employers may prefer to have an off the record conversation with an employee to propose the termination of their employment on mutually agreed terms before any legal dispute arises. This could be because of organisational changes within the business, perceived failings in the employee’s performance or simply conflicting personalities.

Employers may consider that starting confidential exit negotiations is more commercially beneficial than conducting potentially lengthy or acrimonious capability, redundancy or disciplinary proceedings, which carry risks of subsequent litigation and in some cases the potential for negative publicity.

Without prejudice vs pre-termination negotiations

There are two types of off the record meetings an employer could hold:

• Without prejudice meeting: the without prejudice principle generally prevents statements made in a genuine attempt to settle an existing dispute from being admissible as evidence before the employment tribunal. Therefore, without prejudice discussions should only be held where a dispute already exists or where there is a risk that an employee could use the approach to support an unfair dismissal or constructive unfair dismissal claim.
• Pre-termination negotiations: to counter the issues caused by without prejudice meetings (i.e. that there has to be an existing dispute to rely on the principle), a mechanism for ‘pre-termination negotiations’ was introduced in 2013 (through Section 111A of the Employment Rights Act 1996). Section 111A means that employers can commence settlement conversations with an employee where no imminent dispute exists with less risk of those conversations being held admissible in certain tribunal proceedings, as long as there is no ‘improper behaviour’ involved.

What is improper behaviour?

Pre-termination negotiations under Section 111A will be protected from admissibility in unfair dismissal proceedings unless there has been improper behaviour. Where the tribunal considers anything said or done during the pre-termination negotiations was improper, the protection under Section 111A will be lost. Examples of improper behaviour would include any form of bullying or intimidation towards the employee, putting undue pressure on the employee to accept the settlement offer (e.g. by setting an unreasonably short timescale to consider the offer) or informing the employee that they will be dismissed if they do not accept the offer.

Holding an off the record meeting

In order to demonstrate that settlement is a genuine alternative, it is a good idea for employers to have an alternative formal process to fall back on in case settlement cannot be achieved. In introducing the settlement option, the employer can either schedule a meeting with the employee in question to inform them of the relevant disciplinary or performance concerns and that a formal process will shortly begin in respect of those concerns but that, before doing so, the option of an off the record discussion is available.

Alternatively, the formal process could be initiated first by commencing a disciplinary or performance process and, during any formal meeting, an off the record discussion could be introduced. There is no requirement for an employer to notify an employee in advance that it intends to discuss a potential exit and settlement agreement.
ACAS has developed a Code of Practice on Settlement Agreements (the ACAS Code) and this acknowledges that there is also no legal entitlement for employees to be accompanied during pre-termination negotiations. However, the ACAS Code further states that it is good practice for an employee to be allowed to be accompanied by a work colleague or trade union representative at such meetings. This could also be to the employer’s advantage as it could reduce the risk of the employee later alleging that there has been improper behaviour by the employer in conducting any Section 111A negotiations.

The employer should ask the employee if they are willing to have an off the record discussion and clarify whether this would be a without prejudice discussion and/or a protected conversation in accordance within Section 111A. It should be explained to the employee that this means the discussion cannot be referred to in any subsequent employment tribunal proceedings. The employer should also explain to the employee that any conversation on this basis is confidential and it would not have any impact on future disciplinary/performance management processes if the discussions were not successful.

If the employee is happy to continue with the conversation, the employer should inform them that an alternative to starting or continuing the disciplinary/performance proceedings could be to enter into a settlement agreement, which would represent mutual agreement to terminate the employee’s employment. The employer should be careful not to imply that the employee will inevitably be dismissed if the employee refuses to participate in the protected conversation – this would likely amount to improper behaviour and render the discussions admissible.

If the employee is still willing to engage in the conversation, the employer should explain the key terms of the proposed settlement. A settlement agreement could be sent to the employee after the meeting and the employee should be given a reasonable period of time to consider the proposal and to take independent legal advice on the settlement agreement. The ACAS Code suggests an employer should provide the employee with a minimum of 10 calendar days to consider the terms of the offer.

Further key points to consider when having an ‘off the record’ conversation:

• If the employee makes it clear that they are not willing to explore the offer of settlement, the employer should stop the protected conversation straight away and decide whether to continue the original disciplinary/performance process.
• Employers should ensure all written correspondence with the employee relating to the protected conversation is clearly marked ‘covered by section 111A ERA 1996’ for pre-termination negotiations and without prejudice for discussions covered by this principle. This includes any notes taken during meetings where Section 111A or the without prejudice principle is invoked. It is good practice to separate these notes from the general minutes taken in respect of the initial discussion on performance/disciplinary as this will help ensure that there is a clear distinction between the open discussion and the protected conversation.
• Employers should ensure that the person having the protected conversation on behalf of the employer chooses their words carefully and does not say or do anything in the course of the discussion which could be discriminatory or regarded as putting undue pressure on the employee as this could result in protection being lost.

Limitations

While there is no limitation on the claims to which the without prejudice principle may apply (only the requirement that a dispute exists), an employer is only able to rely on pre-termination section 111A protection for ordinary unfair dismissal claims. This means that the fact or content of such pre-termination negotiations may be referred to in other types of claim such as claims for discrimination, whistleblowing, or automatic unfair dismissal unless they are covered by the without prejudice principle.

Therefore, pre-termination meetings are likely to be the best option in more straightforward cases where a normal unfair dismissal claim is expected to be the employee’s only option should the negotiations not turn out as planned and it becomes necessary to dismiss the employee. If there is concern about other types of claim such as discrimination, an employer will need to rely on the protection of the without prejudice principle, which as stated already only applies where the parties are already in dispute.

Summary

Without prejudice or pre-termination meetings are a valuable tool for employers where there is no appetite to conduct a lengthy disciplinary or performance management process. Employers should however be aware that getting the process correct is crucial as failure to do so could render the protected conversations admissible in any sequential tribunal proceedings.