From 29 July 2013:
- pre-termination negotiations will be prevented from being referred to in evidence in unfair dismissal cases; and
- compromise agreements will be renamed as “settlement agreements” in all relevant pieces of employment legislation.
Pre-termination negotiations relate to any discussions regarding any offer or discussion of proposed settlement terms in respect of an employee’s departure. When the proposals were first announced, consideration was given to extending this further to cover other discussions in the workplace but after consultation, a decision was made to focus solely on pre-termination discussions. Such conversations will be inadmissible in ordinary unfair dismissal proceedings unless there has been “improper behaviour” which is thought to include victimisation, harassment, discrimination, criminal activity or putting undue pressure on a party. The interesting point to note is that previously only discussions held in attempt to settle an existing dispute were protected but this change in law extends that protection.
The provision will only prevent what is stated in the settlement offer, or during discussions about it, from being admissible in ordinary unfair dismissal proceedings. This means that the fact and content of such offer or discussions may be referred to in any other case, including claims for discrimination and breach of contract.
Once a pre-termination discussion has occurred and a settlement agreed, a settlement agreement will be drafted to conclude the process. If no settlement has been reached, the employee may or may not be able to refer to these discussions during proceedings depending upon their claim and whether or not improper behaviour has occurred. This is not entirely clear for employers and in time, case law will provide better guidance. Employers are therefore advised to act with caution and not to assume all pre-termination discussions will have fully protection from disclosure.