Pre-termination negotiations not admissible as evidence to support unfair dismissal claim

The recent case of Gallagher v McKinnon’s Auto and Tyres Ltd considered whether pre-termination discussions between the Claimant and the Respondent could be admitted as evidence to support an unfair dismissal claim.

Background

The Claimant had been employed by the Respondent as Branch Manager since 2017. In 2022, following a period of absence due to illness, the Claimant was asked to attend a meeting to discuss his return to work.

At the meeting, which the Respondent intended to be a “protected conversation”, the Claimant was informed that the Respondent no longer considered his role to be necessary, and the Respondent therefore made an offer to the Claimant to terminate his employment by way of a negotiated settlement. The offer included an enhanced redundancy payment. The Claimant was told that if he rejected the offer, then the Respondent would proceed with a redundancy process. The Claimant was given 48 hours to consider the offer.

The Claimant did not accept the offer, and his employment was terminated by the Respondent shortly afterwards. The Claimant subsequently brought an unfair dismissal claim against the Respondent and attempted to rely on the discussion that had taken place, specifically by arguing that the Respondent had placed improper pressure on the Claimant to either accept the offer or be made redundant. The Claimant argued that he had been called into a meeting on the pretence that it was related to his return to work (but was actually about negotiating an exit), that he was not given sufficient time to prepare for the meeting or to consider the offer and that his dismissal was therefore unfair.

The Respondent argued that it was relying on the protection offered under section 111A of the Employment Rights Act 1996 (“ERA 1996”) covering protected conversations, and that, therefore, any pre-termination negotiations were inadmissible as evidence.

The Law

Section 111A(1) of the ERA 1996 states that “evidence of pre-termination negotiations is inadmissible in any proceedings on a complaint under section 111” (i.e. any claim that an employee was unfairly dismissed). Pre-termination negotiations are defined in section 111A(2) as “any offer made or discussions held, before the termination of the employment in question, with a view to it being terminated on terms agreed between the employer and the employee”.

In practice, employers often make use of the protection offered under section 111A of the ERA 1996 to initiate an “off the record” discussion in an attempt to bring an end to an employment relationship which may have broken down or where the employer wishes to avoid a protracted process. Employer’s may also make use of “without prejudice” privilege, which is slightly different (and was not the focus of this case).

However, such protected conversations do have their limitations, as section 111A(4) of the ERA 1996 states that “in relation to anything said or done which in the tribunal’s opinion was improper, or was connected with improper behaviour, subsection (1) applies only to the extent that the tribunal considers just”. In essence, this means that an employee can argue that an allegedly protected conversation should be admissible as evidence in respect of an unfair dismissal claim, where there was alleged improper conduct. There is no clear definition of “improper” conduct, so whether the tribunal considers conduct to be improper will turn on the facts.

In this case, the Claimant argued that the Respondent’s conduct was improper because of the pressure placed on him to accept the offer or be made redundant.

Decision

The Employment Tribunal concluded that the discussion in question was a genuine pre-termination negotiation and was therefore inadmissible as evidence. The Claimant appealed the decision.

The Employment Appeal Tribunal (“EAT”) subsequently considered the Claimant’s appeal. However, the EAT concluded that there was nothing perverse in the Tribunal’s conclusion that the discussion was inadmissible. Specifically, the EAT considered that telling the Claimant that a redundancy process would commence if he did not accept the offer did not constitute undue or improper pressure. In particular, it is relevant that an employee will be consulted in respect of any redundancy process, and such a process will not always result in the employee being made redundant.

Further, the EAT felt that the Respondent had not acted improperly by inviting the Claimant to a meeting to discuss his return to work, but then using that meeting to put forward an offer of settlement. Whilst the EAT acknowledged it may not have been “fair” to raise the option of a negotiated exit, fairness is a different consideration to impropriety, and in any event the Employment Tribunal had concluded that the Respondent had not lied about the purpose for the meeting.

Finally, the EAT was satisfied that the Claimant had not been placed under undue time pressure. Whilst he was given a short time to consider the offer (48 hours), this was only a verbal offer. Had he accepted, a written offer would have followed which may have provided a longer period to consider the offer. In the circumstances, the Claimant’s appeal was dismissed.

Comment

Whilst the decision is not, in itself, surprising given that employers regularly make use of the protection offered under section 111A to initiate protected conversations, it does show that this protection has limits.

In particular, because there is no clear definition or guidance in respect of “improper” conduct, it will come down to the specific facts and the interpretation by a Judge. It is perfectly possible that another Judge could have concluded that the Respondent’s conduct was in fact improper, particularly in failing to inform the Claimant of the reason for the meeting and then giving a short timescale for a response.

It is therefore always important that employers are aware of the parameters of protection offered under section 111A, and, if in any doubt, should avoid saying anything that they would not wish for a Judge to hear.

Case reference:  Gallagher v McKinnon’s Auto and Tyres Ltd [2024] EAT 174