Is it inappropriate to start negotiations about a parting of the ways prior to formal notice having been given? What if informal negotiations fail? Could the offers made be used against you?

It might be an issue for some prominent politicians at the moment but it is a more everyday concern for many employers and even a few employees who have decided that it is best if they leave.

Fortunately for employers and employees ‘off the record’ negotiations can be conducted in a way that means their discussions can’t be later used against them. Settlements are reached through meetings that are labelled ‘pre-termination negotiations’ and discussions referred to as ‘without prejudice’ and ‘subject to contract’.

The confidentiality that extends to without prejudice negotiations will apply where there are genuine attempts being made to settle an existing dispute. It means that in the absence of ‘unambiguous impropriety’- for example intimidation or discrimination – the employee cannot use the details of the negotiation in any claim against the employer.

Three years ago the concept of ‘pre-termination negotiations’ was also introduced to encourage settlement negotiations even where there was no dispute. The statutory provisions made negotiations about termination on agreed terms inadmissible in ordinary unfair dismissal claims provided that there was no ‘improper behaviour’.

The rules regarding without prejudice and pre-termination negotiations are similar but there are important differences as highlighted in a recent employment case*.

This had concerned an office secretary who had initiated discussions about a settlement agreement when she decided that she wanted to leave. There was an exchange of ‘without prejudice’ correspondence discussing settlement terms, but the employee later raised a grievance in which she referred to the previous discussions ‘in open correspondence’. She tried to rely on the negotiations when she brought claims in the Employment Tribunal and the issue of admissibility had eventually to be decided by the Employment Appeal Tribunal.

It made four important findings:

  • It was held the confidentiality of pre-termination negotiations meant that not only was the content of any offers made or discussions held inadmissible the fact that there had been such offers or discussions was also inadmissible. The employee could not rely on the existence of such negotiations in support of an unfair dismissal claim.
  • The inadmissibility rule extended also to discussions within the organisation, such as between different managers or between a manager and an HR adviser. It would defeat the purpose of the inadmissibility rule if reports of discussions to higher management or HR could be used against the employer.
  • Unlike under the ‘without prejudice’ rule if evidence was inadmissible because it derived from pre-termination negotiations there was no power to waive that inadmissibility so the parties could not even agree to the admission of the evidence.
  • Another difference to the without prejudice rule was that the ‘improper behaviour’ exception might arise in more cases than the ‘unambiguous impropriety’ exception. The different phrase had been used so as to allow for a potentially broader approach to the behaviour in issue.

The judgment provides a timely consideration of just how much protection the rules around the ‘pre-termination negotiations’ can give the parties when attempts to reach an agreement on how to part on mutually acceptable terms fail.

This post was edited by Christopher Davies. For more information, email blogs@gateleyplc.com.

*Faithorn Farrell Timms v Bailey


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This blog is intended only as a synopsis of certain recent developments. If any matter referred to in this blog is sought to be relied upon, further advice should be obtained.