Settlement Agreements, Protected Conversations

In 2013 ‘Protected conversations’ were introduced under the Employment Rights Act s 111A to allow employers and employees to have confidential discussions about ending an employment contract where there is no dispute about the termination.  Protected conversations do have limitations as discussions will not be treated confidentially in cases of automatically unfair dismissal, breach of contract or discrimination.   In cases where there is an existing legal dispute, the ‘without prejudice’ rule may apply to prevent statements made being used in court.  The following 5 points should be considered when conducting ‘protected conversations.

1. Different types of discussions will protect different types of claim.  The ‘without prejudice’ rule applies to a wider range of claims than discussions under the ‘protected conversation’ rule

2. The ‘without prejudice’ rule may protect pre-termination discussions, but will only apply if there is a genuine attempt to resolve an existing dispute

3. In cases of unfair dismissal, even if both parties wish to disclose contents of discussions, confidentiality cannot be waived under the ‘protected conversation’ rules, unless either party has engaged in ‘improper behaviour’ such as harassment, intimidation, bullying or undue pressure

4. The details and existence of a ‘protected conversation’ discussion may be protected and inadmissible as evidence in relation to an ordinary unfair dismissal claim

5. In cases where there is an unfair dismissal claim together with a discrimination claim, discussions in relation to the unfair dismissal claim must be ignored by tribunals, but not the discrimination claim

In the case of Dove v Brown & Newirth Mr. Dove was awarded £63,391 for age discrimination.  He had been a salesperson with the jewellery manufacturer, Brown & Newirth since 1990 during which time there were no issues with his work until a restructure in 2010 that resulted in younger team members being introduced and a younger Sales Director.  This is when the situation started to deteriorate as the Sale Director nicknamed Mr. Dove ‘Gramps’.

Mr. Dove continued to work within the sales team and did not complain about the ‘Gramps’ nickname.  In 2015 he was informed that his traditional approach to sales was out of touch with their business needs and customers found him to be old fashioned or long in the tooth.  The Company informed him that as a result of this his customers were being transferred to other sale persons and that as no alternative work could be found for him he was dismissed.

Mr. Dove lodged a case for unfair dismissal on the grounds of Age Discrimination which the tribunal upheld.  The tribunal found that he had been treated less favourably because of his age. The vocabulary used to describe customer views related to age.  The employer then acted on these discriminatory and stereotypical attitudes.  Having his customers transferred to a younger salesperson also reinforced this less favourable treatment. The employer had failed to have a proper performance process and had not investigated or challenged customer views.

Do all your employee’s have contracts of employment? When certain types of work come to an end, some employees face redundancy. They may actually suit a fixed term position available within the company. Are you aware a new contract of employment would then be required? If you are unsure whether this may affect you or you have not followed correct procedure contact Solve who can help from the outset.

When an employee commences work, it should be made clear by the Employer what happens when work comes to an end.

If particular types of work become redundant, the employees who are involved then become at risk of layoff. They may actually have skills that could be useful to their employer and in this instance employers will be more willing to find substitute employment for some of the employees potentially facing redundancy. If this is the case, they should not jump to the conclusion that the employees in question will not be interested, just because the positions available are temporary and not permanent.

If an employee who was facing redundancy, was to show interest in a fixed term position e.g. a vacancy which will only last a few weeks or months until the project ends, the employee and employer could come to an agreement to defer the redundancy until the end of the available fixed term contract. If the employee was asked to work their notice within the new role, they would be less likely to agree to this arrangement. Payments in lieu, enhanced severance payments, retention bonuses etc., are some ways both the employee and employer could make a commercial deal to suit them both.

The right to turn down an offer of a fixed-term role is reasonable on the basis it is not ‘suitable alternative employment’. If an employee was to do this, the employer needs to make them aware that redundancy is anticipated if there is not another role that suits.

What happens if an employee takes a fixed term role that will end in a year?

If a fixed term contract expires and is not renewed, this will be taken as dismissal. If an employee has two years continuous service, they are eligible for protection from unfair dismissal. If you are an employer and are faced with this issue, you should follow a fair termination procedure and also look at the availability of other suitable employment. The Employee may accept another fixed term contract again, especially if they have already done so in the past.

Is an employee entitled to a redundancy payment when a fixed term contract ends?

It is all down to the individual circumstances. If an employee who has been employed to work on a project for a fixed period, and it comes to an end, and the employer has no need for the particular skills used to complete the job, and lastly there is no alternative employment, the employee will then be eligible for statutory redundancy payment. This is a classic redundancy situation to be faced with.

If an employee covers a job while another person is absent on leave; maternity, parental etc. will they be made redundant on their return to work?

This would not be classed as a redundancy. When the employee on leave returns to work there will still be a need for this work to be carried out. If an employee is faced with this situation, their employer should ask them to sign a new contract. This will state that the employment will end on the return to work of the absent employee they are providing cover for. There is no likelihood of any arguments arising over whether this is a redundancy or not if this position ends to allow the absent employee to return to work, procedure is followed correctly and the correct contracts are issued. The law shows this as dismissal for ‘some other substantial reason’, if a fair procedure is followed.

Solve would highly encourage employers to speak with the employee when commencing a fixed term contract. This allows the awareness of what exactly will happen at the end of it, even more so if it is an alternative to being made redundant. Should you require any help with contracts, redundancies or information on any of the above situations please get in touch.

‘New’ legislation regarding disability discrimination is more robust:

In this case an employee who had suffered from stomach adhesions had been issued with a final written warning from their employer, even though the absence was linked to the employee’s disability.  After three months the same employee was absent again, this time it was not linked to his disability, but resulted in the employee being dismissed.

The Employment Tribunal made the decision not to take into consideration the final written warning and that it had led to no adjustments being made.  They felt the final written warning had been appropriate and emphasised that tribunals should take their time when re-opening any previous situations which have occurred, when deciding the reasoning of a later dismissal.

This shows employers that a tribunal is not likely to look at prior warnings again, especially if it does not relate to the unfair dismissal of the employee.  This time the discrimination claim was not successful.  It does however give employers an insight into what options are available to disabled claimants who say their employers have been unfair.

Employees can be disciplined for not reporting absence

In a case where an employee had been given a final written warning.  The employee then failed to report a subsequent absence for two days.  He explained his absence was due to his partner going into labour and that his phone had ran out of battery, however this reasoning was not accepted by his employer and he was dismissed.  The employee claimed he had been unfairly dismissed for taking time off to care for his child.  This claim was not accepted and he was not awarded his statutory right to time off as he had failed to advise them as soon as he could of his absence.

This case gives good advice to employers for when an employee gives reasoning for failing to report absence.  Many employees who have this issue try to rely on the Equality Act 2010.  It is advised that the employer needs to differentiate between the reason for the absence and the failure to report the absence.  If the disciplinary action is down to the failure to report the absence without reasonable explanation then the reason for the absence becomes pointless.

It would be recommended that employers have in place a policy relating to their absence reporting procedure.

Relations between employer and employee can become problematic for many reasons and these issues are usually best resolved through straightforward and honest conversations.  However, settlement agreements (formally known as Compromise Agreements) are another tool which can be used to deal with workplace issues, and are commonly used to help end an employment relationship in a way which is acceptable to both parties or to reach an agreed and final conclusion to a workplace dispute or issue which does not result in an Employment Tribunal.

There are a number of areas an employer should consider before using settlement agreements, such as:

Is a settlement agreement the best way to deal with the issue? Use of this process should not take the place of good management.

How will you approach the admissibility provisions with your employee? You are required to inform your employee that the “without prejudice” principle and the admissibility provisions as set out in the Employment Rights Act 1996 prevents the conversation from being put before an employment tribunal or court, providing certain criteria are met.

Are you going to ask the employee if they would like to be accompanied at any such meeting? Accompaniment is not a legal requirement for settlement discussions, but ACAS consider it to be best practice.

Is it clear that there is no unlawful discrimination or victimisation involved in offering a settlement agreement in the circumstances? Settlement conversations which have arisen because of a dispute which is discriminatory or which end up including issues of discrimination will not be given the protection of the “without prejudice” principle and may end up being heard at tribunal or court.

Are you aware of all the legal requirements for a settlement agreement to be valid? All of the following conditions must be met:

• The agreement must be in writing

• The agreement must relate to a particular complaint or proceedings

• The employee must have received advice from a relevant independent adviser on the terms and effect of the proposed agreement and its effect on the employee’s ability to pursue that complaint or proceedings before an employment tribunal or other court

• The independent adviser must have a current contract of insurance or professional indemnity insurance covering the risk of a claim by the employee in respect of loss arising from that advice

• The agreement must identify the adviser

• The agreement must state that the statutory provisions which set out the above conditions regulating the validity of the settlement agreement have been satisfied

Have you considered what might be a realistic and reasonable timescale for any discussions and negotiations? Employees should be given a minimum of ten days to consider the written settlement offer and each case should be considered on its own merits. Solve can draft the settlement agreement for you, support you through the process and support with negotiations. Please contact Solve for support on 0131 300 0433.

With the aim of reducing the number of disputes going to Employment Tribunal the government launches the Early Conciliation service on 6th April. From then, contacting ACAS will be obligatory prior to lodging a claim. A prospective Claimant will have to send an Early Conciliation form (“EC form”) to ACAS which will include the contact details of the Claimant and the Respondent but which doesn’t, necessarily, have to include any specific details about the possible claim. A claimant will not be able to proceed to tribunal without an EC Certificate, a form issued on receipt of notification to the Early Conciliation service, making the EC form a critical document.

In cases of workplace disputes such as unfair dismissal claims, equal pay and workplace discrimination can be resolved with the Early Conciliation service. For some many of the benefits from using the service include saving time, anxiety and cost of Employment Tribunal. Conciliators should be trained to understand the strengths and weaknesses of any dispute and will provide solutions and promises confidentially. To use Early Conciliation, ACAS must be informed by completing an online form. For further advice, contact Solve. to help with your questions.

For more information, contact Solve.