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Guidance on Confidentiality of Pre-Termination Negotiations

Napthens - August 19th 2016

The Employment Appeal Tribunal (“EAT”) has provided clear guidance on the confidentiality of negotiations between employer and employee prior to the termination of employment.

Background

Section 111A of the Employment Rights Act 1996 states that confidential discussions regarding the termination of employment are privileged. Section 111A allows employers and employees to have confidential conversations concerning termination of the employment relationship (often referred to as protected conversations or without prejudice discussions). The details of the negotiations are inadmissible in evidence before a tribunal or the Court in an ordinary unfair dismissal claim.

This rule does not apply if the unfair dismissal is one that is automatically unfair. For example, where the dismissal is related to whistleblowing or related to an employee asserting a statutory right.

There does not need to be a pre-existing dispute between the parties for the negotiations to be confidential.

Faithorn Farrell Timms LLP v Bailey UKEAT/0025/16

In this case Mrs Bailey was employed part time and towards the end of 2014, FFT made it clear that Mrs Bailey would not be able to work her part time hours going forward. Settlement discussions were initiated on 10th December 2014 and by 7th January 2015, the parties were in dispute.

On 7th January 2015, Mrs Bailey's solicitors wrote a "without prejudice" letter to FFT to simply set out Mrs Bailey's position in general terms, only referencing the settlement discussions and the offer made by Mrs Bailey at the end.

FFT replied on 13 January 2015 by a letter that which was not marked without prejudice. It similarly set out its position, with a passing reference to the settlement discussions.

On 6 May 2015, Mrs Bailey issued tribunal proceedings claiming constructive dismissal and sex discrimination. In her claim, she referred to the settlement discussions on 10 December and the without prejudice correspondence between her and FFT.

FFT denied Mrs Bailey's claims but did not mention Mrs Bailey’s references to the without prejudice discussions. The admissibility of the discussion was raised at a preliminary hearing on 14 October 2015.

The Employment Tribunal (“ET”) Decision

The ET decided that Section 111A only protects the details of the offer that was made from being disclosed and not the fact that without prejudice conversations have taken place. The ET held that the documents were admissible.

FFT appealed and Mrs Bailey cross appealed.

Employment Appeal Tribunal (“EAT”)

The EAT held that Section 111A protects not only the content of the offer, but the mere fact that the discussions had taken place. The fact that pre-termination negotiations have taken place is confidential and is inadmissible in a tribunal or court. Further the EAT held that the privilege or confidentiality under Section 111A cannot be waived by the parties.

The EAT also made it clear that confidentiality is not protected in pre-termination negotiations in a claim for discrimination.

Note for Employers

Following this case, employers can be confident that both the details of pre-termination negotiations and the fact that negotiations have taken place will be inadmissible in an ordinary unfair dismissal claim. This case also makes it clear that where a mixed claim is brought (i.e unfair dismissal and discrimination), the tribunal can disregard the negotiations for the purpose of the unfair dismissal claim but consider them in the discrimination part of the claim.