The Employment Appeal Tribunal (EAT) has ruled that a discussion held between an employee and his employer was not admissible in his claim for unfair dismissal. The discussion was held to amount to a pre-termination negotiation and was in fact a protected conversation. The case highlights the importance and limitations of protected conversations, and the potential impact of improper behaviour during the process, which may result in protection being lost.
Background
The case of Gallagher v. McKinnon’s Auto and Tyres Ltd concerned a branch manager who had been employed by the respondent since 2017. He took a period of leave for a broken foot and, during the meeting to discuss his return to work, the possibility of his departure until the cover of settlement terms was raised. Mr Gallagher was told that a formal redundancy process would commence if he declined the offer. Mr Gallagher did not accept the offer within the 48 hours given for him to consider it and, following a formal redundancy process, his employment was ultimately terminated. He subsequently claimed he was unfairly dismissed, citing the settlement discussions that had taken place during his return-to-work meeting as evidence that his dismissal was a foregone conclusion.
A preliminary hearing was held to determine whether the settlement discussions between the parties prior to Mr Gallagher’s dismissal were protected and, if so, whether the employer’s behaviour in conducting those discussions could be said to have been “improper”, so losing the protection and allowing those discussions to become admissible in the unfair dismissal proceedings.
Tribunal considerations
The Employment Tribunal (ET) first considered whether the “without prejudice” rule applied and decided that it did not as there was no pre-existing dispute between the parties at the point the meeting took place. The ET then went on to agree with the respondent’s argument that, while there was no pre-existing dispute, the discussions fell within section 111A of the Employment Rights Act 1996 instead as they amounted to pre-termination negotiations. Pre-termination negotiations are also inadmissible subject to certain limits, therefore the ET determined that Mr Gallagher could not rely upon the discussions.
EAT decision
Mr Gallagher appealed to the EAT on the basis that the respondent had put undue pressure on him to accept the offer and therefore the discussions should be admissible as evidence.
The EAT considered whether the fact that Mr Gallagher was not aware that a protected conversation was going to take place could amount to improper behaviour. It held that, while the respondent had misrepresented the purpose of the meeting, its reason for doing so was to guarantee Mr Gallagher would attend. It decided that this misrepresentation did not meet the threshold for improper conduct which would make the discussions admissible.
Mr Gallagher also alleged that he was subjected to undue pressure by the respondent by being provided with an ultimatum: accept the offer or be made redundant. However, the EAT considered that the respondent’s evidence sufficiently showed that no such ultimatum was given. It considered that, while the respondent had explained that his role would be redundant, it did not say his employment would necessarily terminate as a result, as there are often opportunities to avoid dismissal in redundancy situations. Further, the EAT was satisfied that the respondent had proceeded calmly, clearly communicating the financial package and providing Mr Gallagher with an opportunity to consult his family on the proposed offer, none of which, together or alone, suggested unduly coercive or improper behaviour.
Finally, the EAT considered whether the 48 hours given to consider the offer could be considered as improper behaviour. The Acas Statutory Code of Practice and Guidance provides a general rule that a minimum period of 10 days is to be provided for parties to consider a formal written offer. In this case, the parties were not at that stage as the offer had only been made verbally, rather than in writing. The 10-day period could have been provided had Mr Gallagher indicated a willingness to accept the offer and written settlement terms then been sent. While a longer period could have been given following the verbal offer, the fact that it wasn’t did not, in the EAT’s determination, amount to improper conduct. The EAT also noted that Mr Gallagher had no evidence to show that the 48-hour period given was insufficient for him to consider the offer with his family or get appropriate advice.
The case has been sent back to the ET which will now consider the unfair dismissal claim and Mr Gallagher will not be able to rely on the protected discussions in support of his case.
Comment
It is worth remembering that, while pre-termination negotiations are generally protected from being admitted as evidence in ordinary unfair dismissal claims, that protection does not extend to automatic unfair dismissal or discrimination claims. Therefore, had Mr Gallagher’s case been one of discrimination or automatic unfair dismissal, the discussions he was seeking to rely upon would have been admissible.
It is also important to note that, if no legal dispute exists or is at least reasonably anticipated, parties will be unable to rely upon the “without prejudice” rule. The protection under section 111A relating to pre-termination negotiations will therefore be crucial in resisting the admissibility of evidence about those discussions.
The case serves as a reminder that, if an employer’s conduct in the course of settlement discussions is considered to be improper, those discussions will not benefit from protection and could be used as evidence in a claim for unfair dismissal. Improper conduct covers a range of behaviours including but not limited to undue pressure, harassment, intimidation and discrimination. While in this case the misrepresentation about the purpose of the meeting was not found to meet the threshold of improper behaviour, the judge did acknowledge that an employee should be given notice of the type of meeting they are to attend and it was not fair for the respondent to use false pretences.
Therefore, to minimise the risk of a similar challenge, it is important that employers proceed with as much transparency as they reasonably can about the purpose of the meeting they wish to conduct, offer sufficient time for the employee to consider the offer (typically 10 days to consider a written offer is recommended in accordance with Acas guidance) and avoid any actions that may put the employee under undue pressure to make a decision. Helpfully, this case does provide support for asking an employee to indicate if they are willing in principle to accept an offer or at least to continue discussions within a shorter period.
