Settlement Agreements

What is protected in a protected conversation? When employers are considering terminating employment and are considering doing so without the procedure that is normally required, and there is no existing dispute in place, they can initiate what are called “protected conversations” to seek an agreed settlement with the employee ‘off the record’. Any protected conversations regarding the ending of the employment and the offer are then classed as ‘inadmissible’ as evidence at Employment Tribunal if a claim was subsequently made. This means that they cannot be used as evidence against the employer in an unfair dismissal claim, though they can still be relied on for other claims. An Employment Appeal Tribunal decision has clarified the scope of protection under this section. In Faithorn Farrell Timms v Bailey, The claimant was an office secretary who worked part time. Around December 2014, it became clear to her that she could no longer continue part time working and she felt she had no choice but to resign. She commenced discussions to reach a settlement agreement but these were not successful. She later brought claims of constructive dismissal and sex discrimination; claiming the employer’s treatment during these discussions was bullying and discriminatory and that a delay in procedure had breached the implied term of mutual trust and confidence. In the claims presented, the claimant had mentioned the fact that settlement discussions had been held. The employment tribunal (ET) had to determine which documents were inadmissible as evidence. The ET found that none of the documents were inadmissible, so the claimant could rely on them all as evidence for her claims. They explained that the protection under the relevant law, Section 111A of the Employment Rights Act 1996, only applies to the details of offers made or details of the actual discussions, not to the fact that discussions had taken place at all. Therefore, the claimant could rely on discussions taking place in her evidence. The extent to which the protection under the relevant law applied was appealed to the Employment Appeal Tribunal (EAT). In overturning the ET decision, they judged that the inadmissibility applies to evidence of the offer made, discussions held and to the fact of discussions, not just their content. This, essentially, means that claimants cannot rely on the fact that such settlement discussions took place as evidence to support their claim of, perhaps, a premeditated dismissal. This provides hesitant employers, who may be wary of initiating settlement discussions when there are no disputes, with further support and encouragement to take this route when there may be a risk of an unfair dismissal claim. “This is obviously a win for employers. It means that a Tribunal will not get to hear that an employer has tried to end employment via settlement agreement when they are dealing with an unfair dismissal claim. Although it shouldn’t, news that a settlement agreement was attempted could cloud their judgement over whether the dismissal was premeditated. This case has confirmed that Employment Tribunals will not now, in the main, be party to this information”. - Education Business Partner, Dave Carey

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