Protected Conversations with Employees: What Employers Need to Know

Protected conversations with employees allow employers to discuss a possible agreed departure without immediately starting a disciplinary, capability or redundancy procedure.

They can help when the employment relationship has become difficult or when both sides may prefer a negotiated exit. However, simply calling a meeting a “protected conversation” does not guarantee confidentiality.

Therefore, employers need to understand when the protection applies, when they may lose it and how to manage the discussion properly.

What is a protected conversation?

A protected conversation is a confidential discussion between an employer and an employee about ending the employment relationship on agreed terms.

These discussions usually take place before the employer prepares a formal settlement agreement. Either the employer or the employee can suggest one.

Section 111A of the Employment Rights Act 1996 generally prevents either party from using certain pre-termination negotiations as evidence in an ordinary unfair dismissal claim.

As a result, both sides can explore a possible settlement without normally having the discussion presented to an employment tribunal in that type of claim.

The discussion may cover:

• the proposed termination date;
• a compensation payment;
• notice pay and accrued holiday;
• an agreed employment reference;
• confidentiality obligations;
• the return of company property; and
• post-termination restrictions.

However, the conversation does not end the employment relationship. Both sides will normally need to record any agreed terms in a legally valid settlement agreement.

When could a protected conversation be appropriate?

An employer may consider a protected conversation when an agreed departure appears preferable to continuing with a formal employment process.

For example, suitable circumstances may include:

• continuing concerns about performance;
• a breakdown in the working relationship;
• ongoing conduct issues;
• a workplace dispute that has become difficult to resolve;
• proposed organisational changes; or
• a situation in which both sides may prefer a negotiated departure.

Nevertheless, a settlement agreement remains voluntary. The employee may accept the proposal, reject it or suggest different terms.

Employers should not automatically use a protected conversation instead of a proper disciplinary, capability, grievance or redundancy procedure. First, they should decide which process best fits the circumstances.

Where an employer is considering redundancy, it should also follow a fair consultation and selection process. You can read more on our redundancy advice for employers page.

Are protected conversations always confidential?

No. This is one of the most important limitations for employers to understand.

Section 111A mainly protects negotiations connected with ordinary unfair dismissal claims. It does not provide complete confidentiality against every possible employment claim.

For instance, an employment tribunal may still consider the conversation in claims involving:

• discrimination;
• harassment or victimisation;
• whistleblowing;
• automatic unfair dismissal;
• breach of contract;
• unlawful deductions from wages; or
• other statutory rights.

An employee may also bring several different claims. In that situation, the tribunal may exclude the conversation from the ordinary unfair dismissal claim but consider it as part of another claim.

Consequently, employers should review the employee’s circumstances before starting the discussion. They should take particular care where the employee has raised concerns about discrimination, health and safety, whistleblowing or statutory rights.

Protected conversations and without prejudice discussions

Employers often confuse protected conversations with discussions described as “without prejudice”. However, the two protections work differently.

The without prejudice principle normally applies when:

• there is an existing dispute;
• the parties genuinely want to settle it; and
• neither party has acted improperly.

By contrast, section 111A can apply even when no existing dispute has arisen. However, it mainly protects discussions connected with ordinary unfair dismissal claims.

In some cases, both protections may apply. Even so, writing “without prejudice” on a letter or describing a meeting as confidential will not create legal protection by itself.

When can an employer lose the protection?

An employer may lose section 111A protection if improper behaviour takes place. In those circumstances, an employment tribunal may allow evidence of the negotiations where it considers that fair.

Examples of potentially improper behaviour include:

• bullying, intimidation or harassment;
• discrimination or victimisation;
• physical threats or aggression;
• placing unreasonable pressure on the employee;
• allowing too little time to consider the offer;
• threatening dismissal before carrying out a fair process; or
• threatening to damage the employee’s reputation.

Acas recommends giving the employee a reasonable period to consider a formal written offer. Generally, employers should allow at least ten calendar days unless both sides agree otherwise.

An employer may explain that it could continue with a formal procedure if the parties do not reach a settlement. However, it should not suggest that it has already decided to dismiss the employee.

How should the employer begin the discussion?

The employer should hold the meeting privately. It should also choose someone who understands the circumstances, the proposed terms and the limits of the legal protection.

At the beginning of the meeting, the employer should explain:

• that the parties are discussing a possible settlement agreement;
• why the employer has raised the proposal;
• that the employer intends the discussion to remain confidential;
• that the employee does not have to accept the proposal;
• that the employee may negotiate the terms; and
• what will happen if the parties do not reach an agreement.

Above all, the employer should not present the proposal as a final decision.

An employee has no automatic statutory right to bring someone to a settlement meeting. Nevertheless, allowing a workplace colleague or trade union representative to attend may help the discussion proceed fairly.

Making a written settlement offer

If the employee agrees to consider the proposal, the employer can provide a written offer that sets out the suggested terms.

The offer should cover matters such as:

• the termination date;
• notice pay;
• holiday pay;
• the proposed compensation payment;
• the employment reference;
• confidentiality provisions; and
• continuing restrictions.

The employee must obtain advice from an appropriate independent adviser before signing a valid settlement agreement.

For more information about preparing and negotiating agreements, visit our settlement agreements for employers page.

What happens if the employee rejects the offer?

If the employee rejects the proposal, their employment continues unless the employer later ends it through another lawful process.

The employer may still begin or continue:

• performance management;
• disciplinary proceedings;
• a redundancy consultation;
• mediation;
• a grievance procedure; or
• another appropriate workplace process.

However, the settlement proposal must not predetermine the outcome of any later process. Managers should remain open-minded, consider the evidence and follow a fair procedure.

Furthermore, the employer should not discipline or disadvantage the employee simply because they rejected the offer.

Mistakes employers should avoid

Common mistakes include:

• assuming the discussion is protected against every type of claim;
• threatening immediate dismissal;
• allowing insufficient time to consider the offer;
• failing to explain what happens if the employee rejects the offer;
• using discriminatory or aggressive language;
• making allegations without supporting evidence; and
• starting the discussion without assessing the legal risks.

Therefore, taking advice before approaching the employee can prevent avoidable errors. It may also reduce the risk of the negotiations creating a further dispute.

Assistance with protected conversations

Protected conversations with employees can provide a practical route towards an agreed exit. However, the legal protection is more limited than many employers realise.

EBS Law helps employers plan protected conversations, draft offers, negotiate terms and prepare legally binding settlement agreements.

Employers should consider taking legal advice before starting discussions where allegations may involve discrimination, whistleblowing, automatic unfair dismissal or another claim outside the ordinary unfair dismissal rules.