UK: EAT considers when pressure to agree termination becomes 'improper behaviour'

The fact and content of discussions with an employee with a view to agreeing termination cannot be relied on in ordinary unfair dismissal claims unless the employer has behaved improperly (known as 'protected conversations').  In Gallagher v McKinnon's Auto and Tyres Ltd, the EAT upheld a tribunal's ruling that it was not improper for an employer to invite the employee to a return-to-work meeting (following sickness absence) and then tell the employee that if they failed to accept an oral settlement offer within 48 hours, the employer would start a redundancy process. 

The employee claimed that these circumstances amounted to undue pressure, on the grounds that he was misled about the purpose of the meeting, that in effect he was being told that he would be dismissed if he didn’t accept, and that the Acas Code of Practice on Settlement Agreement recommends that employees should be given 10 days to consider an offer.  The EAT ruled that it was not perverse for the tribunal to decide that there was no improper behaviour: 

• Although the employer had told the claimant that his role was redundant, this was not the same as telling him that he would inevitably be dismissed, given the possibility of redeployment.  Whether a role is redundant is a matter for the employer alone and the analysis is different from disciplinary cases – a warning of dismissal if settlement is not agreed, prior to carrying out any disciplinary investigation, suggests that dismissal is a foregone conclusion and therefore does place undue pressure on the employee to agree.
• Misrepresenting the purpose of the meeting was unfair on the claimant, but insufficient to amount to impropriety.  The tribunal had not found that the employer had deliberately lied about the meeting and the initial shock was mitigated by the calm manner in which the meeting was conducted and the time given to consider the offer details. 
• The EAT noted that the Acas Code makes a distinction between an initial oral proposal and written terms of a settlement agreement, and the recommended 10 day consideration period applies to the latter.  It was open to the judge to determine that the 48 hour deadline for deciding on the oral offer did not involve undue pressure, albeit that another tribunal might have reached a different conclusion.

Employers will welcome the pragmatic approach of the tribunal in this case, but should note the warning that another tribunal could have reached a different conclusion.  It is therefore prudent when making a termination offer to (i) make express that no decision has yet been taken to dismiss, albeit that a redundancy or disciplinary process may be commenced in the event settlement is not reached, (ii) if the purpose of the meeting is not going to be revealed in advance, use a general description which will not mislead, such as 'to discuss the future/next steps'; once the purpose has been explained, ensure the employee understands that they are not obliged to engage in that conversation and consider adjourning for a short period should the employee feel blindsided and unable to continue, and (iii) ensure the employee has a reasonable time to consider whether to agree to the initial oral offer in principle, taking into account whether this has come as a shock and what support they have;  this could be only two or three days, depending on the circumstances, but it would be prudent to provide additional time if reasonably requested.  Further time will then need to be allowed to consider the written settlement terms.

Employers should also note that this statutory protection for settlement discussions only applies to ordinary unfair dismissal claims and does not prevent evidence being presented in other types of claim such as discrimination or automatically unfair dismissal claims.  In those cases, only "without prejudice" protection can apply to protect discussions, and this requires there to have been an actual or contemplated legal dispute in existence between the parties.  It is of course advisable in any event to avoid making statements during termination discussions that would be unhelpful in any future tribunal claim.