Protected conversations: key takeaways for employers
A recent Employment Appeal Tribunal (EAT) decision provides guidance for employers on when pre-termination negotiations are inadmissible in unfair dismissal claims, even when the offer of termination is unexpected or subject to a short response time.
Protected conversations v without-prejudice discussions
A protected conversation is a discussion between an employer and an employee about ending the employment relationship. These discussions cannot be used as evidence in ordinary unfair dismissal claims, enabling open dialogue about potential termination without concerns about the impact on potential future tribunal litigation. However, protected conversations do not apply in cases of automatic unfair dismissal (such as those related to whistleblowing) or discrimination claims, where confidentiality protections fall away and these discussions may be admissible. The definition of a protected conversation is set out in Section 111A of the Employment Rights Act 1996.
By contrast, without-prejudice discussions are protected only when there is an existing dispute, such as a grievance or dismissal claim, as they aim to encourage settlement negotiations without prejudicing either party's position if the matter proceeds to a tribunal. If there is no active dispute, without-prejudice protection does not apply.
The confidential nature of protected conversations or without-prejudice discussions can fall away if there is evidence of improper conduct, such as threats or coercion.
Factual background
In Gallagher v McKinnon’s Auto and Tyres Ltd, the claimant, Mr Gallagher, was employed as a branch manager. After being off sick for several months, Mr Gallagher was invited to a meeting to discuss his return to work (Return to Work Meeting). However, the employer, MAT Ltd, instead used the Return to Work Meeting as an opportunity to offer Mr Gallagher a redundancy package, and allowed him only 48 hours to consider the offer. Mr Gallagher did not accept the offer within that window, and was eventually dismissed for redundancy. Mr Gallagher later claimed unfair dismissal and sought to use the discussion that took place during the Return to Work Meeting as evidence of unfair treatment. He argued that the offer of dismissal and the 48-hour deadline put him under undue pressure to enter into an agreement.
Tribunal decision
The Tribunal found that the discussions at the Return to Work Meeting qualified as a protected conversation and were thus inadmissible in the unfair dismissal claim. It highlighted the importance of the redundancy context, rather than a disciplinary one. In redundancy situations, the focus is on the necessity of the role rather than on individual conduct. Offering redundancy terms in this context does not imply an inevitable dismissal. In the Tribunal's view, this prevented undue pressure on Mr Gallagher.
Additionally, the Tribunal found that the 48-hour response period applied only to the initial verbal offer; if accepted, a formal settlement agreement would have been prepared, allowing Mr Gallagher more time to review and seek legal advice. The Tribunal considered this approach reasonable, enabling him to make a preliminary decision without rushing into detailed legal terms.
Mr Gallagher also argued that he felt ambushed by the redundancy offer in a meeting scheduled to discuss his return. While the Tribunal acknowledged this might have been surprising, it found no impropriety, noting that the employer presented the offer calmly, provided details upon request, and allowed time for consideration. This approach, the Tribunal found, mitigated any initial shock and preserved confidentiality protections for the discussions.
EAT decision
Mr Gallagher appealed the Tribunal’s decision, arguing that the employer’s conduct during the Return to Work Meeting constituted undue pressure and improper behaviour. He contended that the 48-hour response window was unreasonable and that the use of a return-to-work meeting to discuss his exit was misleading. However, the EAT upheld the original Tribunal’s findings, confirming that the discussions fell within the definition of a protected conversation.
The EAT agreed with the Tribunal that the employer’s actions did not meet the threshold for improper conduct that would remove the protection of confidentiality under Section 111A. It noted that while Mr Gallagher may have been surprised by the content of the meeting, the redundancy context differed from a disciplinary one, and the employer’s calm and measured approach helped mitigate any sense of undue pressure. The EAT also affirmed that the 48-hour window applied only to the initial verbal offer; if Mr Gallagher had accepted, he would have had further time to consider a formal written agreement with the option to seek independent advice.
Learning points for employers
Employers should take care to avoid any conduct that could be seen as improper, as protections for pre-termination negotiations may be lost if an employer, for example, threatens dismissal in a disciplinary setting or misleads an employee about the purpose of the meeting. Maintaining good faith throughout these discussions is essential to ensure they are fair and constructive.
The ACAS Code on Settlement Agreements contains guidance on how to conduct pre-termination negotiations and can be found here.
You may like to explore our HR & Employment Law for Managers eLearning - a series of nine short online courses covering areas such as Conducting a Disciplinary, Dealing with a Grievance, Holding a Protected Conversation. Courses include a mix of short videos with case study scenarios and practical exercises to help the individual understand the issues. Book a quick demo or find out more.