We use cookies to give you the best online experience. By using our website you agree to our use of cookies in accordance with our cookie policy. Learn more here.Close Me
Imagine the following situation.....you have a long
standing employee with a below average performance record (although
shockingly no formal procedure has been started) and they have no
disciplinary record but are as irritating as a leg full of mosquito
bites. Wouldn't it be great if you could tell them outright
that it is not working out and that you want to discuss the terms
upon which they would agree to leave? This is the intention behind
the Enterprise and Regulatory Reform Bill (the
"Bill").
At present, there is a risk associated with discussing departure
terms with an employee as you will not be covered by the
"without prejudice" rule unless there is an existing
dispute. Such a discussion could fuel bullying allegations or be
used as evidence in an unfair dismissal claim.
Under the Government's proposals, the intention is that you
would be able to have a fair conversation with any employee about
terminating their employment without the employee being able to use
that conversation in an unfair dismissal claim. Sounds simple
enough doesn't it? Whether wording can actually be drafted to
safely put it into practice is altogether a different issue.
The draft wording in the Bill states that in an unfair dismissal
claim "an employment tribunal may not take account of
anyoffer madeordiscussions held, before the
termination of the employment in question,with a
view to it being terminated on terms agreed between the employer
and the employee."
This provision does not give employers as much scope as
previously thought when protected conversations were initially
discussed. The intention appears to be that settlement terms are
put forward during the conversation. A BIS press release stated
that the offer could be in the form of a settlement agreement or a
letter, although the Bill wording does not specify that settlement
terms need to be put forward during the conversation or that they
need to be in writing. This provision will not apply in cases of
automatic unfair dismissal (e.g. whistleblowing) and such
conversations can be used as evidence in a discrimination
claim.
BIS have said that settlement agreements should not replace
performance management and that fair processes would still need to
be followed. However, there is no pre-requisite that there be any
motivation for having such a conversation (although if there is no
context to such discussions an employee may be led to conclude that
there was a discriminatory reason).
In addition, and this is no doubt where things could potentially
get very messy indeed, if an Employment Tribunal considers that
anything said or done was "improper" or "connected
with improper behaviour" it will be admissible. There is no
guidance yet on what "improper" means but it may well be
put on you to adduce evidence of issues with the employment
relationship and perhaps evidence that the settlement terms put
forward were reasonable?
There is definitely potential for the waters becoming muddied in
the employment tribunal. With Judges potentially having to decide
whether a conversation is improper and if not then putting
knowledge of it aside for purposes of an unfair dismissal claim but
not any related discrimination claim. It is also difficult to see
how the conversation could be completely disregarded if it forms
one element of a constructive dismissal claim, or if a grievance is
raised subsequently as a consequence of the conversation. This may
put extra pressure on the Tribunal system if there is a need for
more pre-hearing reviews, or it adds to the length of the
Hearing.
Also, for many, this concept will go against the protectionist
intentions of the Employment Rights Act. Essentially, if the
employee does not agree to go on the proposed terms they will have
to stay on in employment, knowing management want them out, without
recourse. Employers may well be tempted to put forward an offer
that they know will not be accepted to sow the seeds of doubt in
the employee and push them to move on.
The Bill is not yet finalised and we will let you know
when there are any further developments. In the meantime, as
before, we suggest you seek legal advice if you are considering
having any pre-termination settlement discussions with
employees.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
The High Court and, most recently, Court of Appeal decisions in the "banker bonus" litigation stemming out of the Commerzbank/Dresdner merger in 2008 have received extensive media coverage.
In October 2012, the Court of Appeal confirmed that a Service Provision Change ("SPC") TUPE transfer can only occur where the client who receives the service, before and after the change, remains the same (Hunter v McCarrick [2012] EWCA Civ 1399).
Following much debate, on 24 April 2013 the House of Lords finally gave its approval to employee shareholder status which will now take effect from Autumn 2013.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
