Ending the employment relationship - Protected Conversations

Ending an employment relationship can be a complex process, fraught with legal and reputational risks. When businesses fail to follow proper procedures, they may face costly litigation, damage to their reputation, and loss of productivity amongst colleagues. To ensure a smooth separation, employers often turn to settlement agreements as a means to mitigate risk and keep matters confidential.

Employers are, however, often confused about how to start conversations leading up to settlement agreements, with a misunderstanding on what can and cannot be said in such meetings. We have previously discussed the two different types of conversations available under UK law in our article here which includes guidance on preparing for and the process of the meetings.

What is clear, however, is that despite an employer’s best efforts, employees may try to introduce such conversations during any future litigation, citing, amongst other reasons, improper behaviour by the employer. Indeed, the ACAS Code of Practice on settlement agreements provides guidelines for both employers and employees on what may be deemed improper behaviour, including but not limited to the employee not being given enough time to consider the offer and undue pressure on the employee to accept the offer.

A recent Employment Appeal Tribunal (“EAT”) case considered allegations of improper conduct against an employer and whether the employee should be able to introduce the content of the protected conversation as part of their unfair dismissal claim. The case makes good reading for business owners and HR representatives.

Gallagher v McKinnon's Auto and Tyres Limited

This case concerned Mr Gallagher who was invited to a return to work meeting following a prolonged absence of sickness absence. During his absence, Mr Gallagher’s work was covered by other team leads and the employer came to the realisation that his role was no longer required.

During the return to work meeting, Mr Gallagher’s absence was discussed, before a protected conversation was introduced by the employer. Mr Gallagher was made aware of a proposed redundancy process and was offered an additional £10,000 redundancy payment if he were to sign a settlement agreement. He was given 48 hours to consider the offer, otherwise the company would proceed with the redundancy process. Mr Gallagher ultimately rejected the offer and was dismissed for redundancy.

Mr Gallagher brought an unfair dismissal claim in the Employment Tribunal. As part of his claim, Mr Gallagher sought to rely on the contents of the protected conversation, citing improper behaviour by the employer. In particular, Mr Gallagher raised the following:

• Undue pressure by the employer to accept the offer, failing which he would be made redundant;
• Undue pressure in only providing 48 hours to accept the financial offer; and
• Lying about the purpose of the return to work meeting.

The Employment Tribunal found in favour of the employer on all counts. Mr Gallagher appealed to the EAT.
The EAT expanded on the Employment Tribunal’s reasoning, confirming the following;

• There was no undue pressure on the employee to accept the offer with a risk of redundancy should he not. A redundancy process does not ultimately mean dismissal. Often, employees survive redundancy and/or are redeployed within the business, and it could not be said, therefore, that Mr Gallagher would definitely be made redundant at that stage.
• Being given 48 hours to accept the financial offer did not amount to undue pressure. The offer put forward by the employer was simply relating to finances. The “minimum of 10 working days” for employees to accept or reject the offer (as stated in the ACAS guidance) applies to the formal written terms of the settlement agreement which would have followed, should he have accepted the financial offer, and not the initial proposed offer.
• The rationale for the meeting was not deemed to be improper conduct. Whilst it is never ideal for individuals not to know the true rationale for a meeting, the EAT did not believe that the employer had “lied about the reason for the meeting”.

Whilst every case is based on its own facts, the findings by the EAT are helpful to employers when carrying out such conversations. We often hear of allegations that employers treat employees unfairly by inviting them to meetings and “hijacking” them with a protected conversation. However, this case should give some comfort to employers on this point.

Employers should, however, still treat such conversations with care and ensure that the employee is made aware that the outcome of such negotiations will not affect or cloud the employer’s judgement in any subsequent redundancy or disciplinary decisions.

By following these best practices, employers can navigate these discussions more effectively and reduce the risk of disputes.

A copy of the judgment in Gallagher v McKinnon's Auto and Tyres Limited can be read here.

For ACAS guidance on settlement agreements, please click here. 

These notes have been prepared for the purpose of articles only. They should not be regarded as a substitute for taking legal advice.