In the recent decision of Gallagher v McKinnon’s Auto and Tyres Ltd, the EAT considered whether pre-termination negotiations under section 111A of the Employment Rights Act 1996 (ERA 1996) were inadmissible in tribunal proceedings.
Background
According to section 111A of the ERA 1996, employers can commence settlement conversations with an employee to terminate employment, even where no dispute exists (i.e. a protected conversation). Provided that no “improper behaviour” is involved, those discussions will not be admissible in an ordinary unfair dismissal claim – so, they are effectively “off the record”. The difficulty with navigating a protected conversation is that what amounts to “improper behaviour” is not defined and ultimately, it would fall to a tribunal to decide, taking account of all the circumstances.
Given that employers routinely use protected conversations to by-pass often lengthy formal processes in favour of a mutually agreeable resolution with employees, getting them right is important.
Employment Tribunal
Mr Gallagher was employed by McKinnon’s Auto and Tyres Limited. Following a period of sickness absence in 2022, Mr Gallagher was invited to a return-to-work meeting, during which he was presented with a settlement package to terminate his employment. He was given 48 hours to consider the offer and was told if he did not accept the offer McKinnon would commence a redundacy procedure.
Mr Gallagher rejected the offer, and following confirmation that his employment would terminate on the ground of redundancy, he brought an unfair dismissal claim in the Employment Tribunal. In his tribunal claim, Mr Gallagher sought to rely on the pre-termination discussions he had with McKinnon on the basis that there was improper behaviour. He argued that:
- he had been misled in relation to the purpose of the meeting held in August 2022, which was labelled as a return to work meeting;
- he had been threatened with redundancy if he refused the offer; and
- he faced significant time pressure given he was allowed just 48 hours to make a decision.
The Employment Tribunal disagreed that McKinnon had acted improperly and held that the settlement discussions were indeed inadmissible. Mr Gallagher appealed.
EAT decision
The Employment Appeal Tribunal upheld the Tribunal’s decision that the offer was part of a protected conversation and that those discussions were inadmissible in the unfair dismissal proceedings. It held that the McKinnon had not mislead Mr Gallagher, nor had it threatened him, or subjected him to unreasonable time pressures. In particular, it agreed that:
- Ostensibly inviting Mr Gallagher to a return to work meeting, but instead using it to discuss settlement may not have been fair, but this is a different question to impropriety. It was relevant that the meeting was conducted calmly, requested information was provided and Mr Gallagher was allowed to discuss matters with his family.
- Telling Mr Gallagher that a redundancy process would be commenced if he did not accept the settlement was different to threatening dismissal.
- Setting a 48-hour deadline for acceptance of a verbal offer was deemed to be permissible given that a written settlement agreement would have been provided if Mr Gallagher had accepted. Thereafter, Mr Gallagher should have been allowed 10 days to consider, in line with Acas guidance.
Key take aways
This case seems to set a fairly high bar before an Employment Tribunal will find impropriety during a “protected conversation“. Although Mr Gallagher had three seemingly legitimate concerns, this was not sufficient to render the discussions inadmissible, even as a whole. On the basis of this judgement, then, it seems that there are limited perils of engaging with protected conversations.
However, this is just one judicial approach and Employment Judge Barry Clarke himself acknowledged in his EAT judgement that “another judge may have reached a different conclusion” (specially about the timeframe issue). Accordingly, we would still recommend adopting a cautious approach and as a minimum, following the guidance set out in the ACAS Code of Practice on Settlement Agreements. Protected conversations should be a productive means of reaching pragmatic resolutions for employers and employees, but to avoid potential perils, we would not suggest throwing caution to the wind on this case alone!