Employment settlement agreements: Without prejudice and protected discussions under section 111A Employment Rights Act

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What is a ‘protected discussion’ under Section 111A of the Employment Rights Act 1996?

Section 111A of the Employment Rights Act 1996 enables confidential conversations to take place between employer and employee.

In many ways this provision is similar to the ‘Without Prejudice’ principle. The term ‘Without Prejudice’ is commonly used by lawyers as a means of conducting ‘off the record’ discussions, generally with a view to reaching an agreement to resolve a dispute.

In the context of an employment dispute it enables an employer to talk to an employee ‘off the record’ and on a confidential basis about terminating their employment with a settlement agreement, without the details of that conversation becoming admissible in any subsequent legal proceedings, such as a claim in an Employment Tribunal.

However, for the ‘Without Prejudice’ principle to apply there must be an existing dispute. This presented a practical problem for many employers wishing to raise new matters with their employees and led to the introduction of Section 111A of the Employment Rights Act 1996, which allows such discussions to take place even where there is no existing dispute.

Section 111A states that evidence of pre-termination negotiations (including any settlement offers) will be inadmissible in any legal proceedings.

There are however some exceptions to this rule, such as any occasion when something is said or done which in the tribunal’s opinion is ‘improper’. This would include conduct which could be regarded as harassment or bullying. Employers therefore have to exercise caution when conducting negotiations.

It is also important to note that it does not apply to all claims. Claims for discrimination, automatic unfair dismissal or unlawful deduction of wages, for instance, are excluded.

Subject to the exceptions any discussions taking place on a protected basis cannot be referred to or relied upon by either party at a later date if a settlement agreement cannot be reached.

So, where such a discussion occurs before a subsequent disciplinary or dismissal process, the employee is prevented from referring to those discussions to prove that the result of the process was predetermined.

The idea behind the provision is that it promotes and encourages an out of court settlement agreement being reached, thereby avoiding the costs, delays and stresses associated with formal legal proceedings.

Because employers can initiate protected discussions without there being a pre-existing dispute it means they don’t have to give their employees any forewarning.

An employee who believes they are being unfairly criticised during a Section 111A  conversation is still entitled to bring a grievance if they so wish.

There is some overlap between Section 111A and the Without Prejudice principle where there is an existing dispute when the ‘off the record’ chat takes place, as discussions will be covered by both provisions.

For guidance on Section 111A, protected discussions and ‘Without Prejudice’ conversations in relation to employment settlement agreements call our FREE helpline on 0808 139 1589 or drop us an email.