New employment tribunal rules: some essential ‘pre-termination’ info and tips.

Pattinson & Brewer employment specialist Paul Statham highlights some further interesting points regarding the current employment tribunal changes …

As of 29 July, for any reference in legislation to ‘compromise agreements’, ‘compromise contracts’ and ‘compromises’, the word ‘settlement’ will be substituted for ‘compromise’. Meaning, for example, that a ‘compromise agreement’ is now a ‘settlement agreement’.

Unfortunately in listing all the legislation in which the term ‘compromise’ occurs, the Government missed certain pieces of legislation and so, technically, the law has not been amended in respect of these.

At the same time, Section 111A of the Employment Rights Act 1996 comes into force, providing that evidence of pre-termination negotiations is inadmissible in any subsequent unfair dismissal proceedings, subject to certain exceptions that I discussed in previous articles. ‘Pre-termination’ in negotiations is defined 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”.

The provision only applies to ‘normal unfair dismissal’, not to any case where there is an allegation of automatic unfair dismissal, such as dismissal for whistle-blowing, for a reason connected to the Equality Act, or for trade union membership. It also does not apply to breach of contract or wrongful dismissal claims.

A tribunal can rule that pre-termination in negotiations can be referred to in tribunal proceedings if there is evidence of ‘improper’ behaviour.

ACAS has now published a Code of Practice on their website. Failure to follow the code does not, in itself, make a person liable to proceedings, nor will it lead to any adjustment of the compensation award, but the tribunal will take the code into account when considering relevant cases.

The code lists at paragraphs 18 examples of improper behaviour, including:

(a)          Not giving the reasonable time for consideration of an agreement (paragraph 12 suggests a minimum period of 10 calendar days)

(b)          An employer saying, before any disciplinary process has begun, that if settlement is rejected, then the employee will be dismissed

(c)          An employee threatening to undermine an organisations to public reputation if the organisation does not sign the agreement, unless it is covered by the provisions of the Public Interest Disclosure Act.

ACAS has also issued a lengthy guidance document that includes, for the first time, optional template letters to initiate settlement discussions, and a model settlement agreement.

I commend these documents to anyone who is invited to pre-termination negotiations, or has to advise someone about them. It is going to be very interesting to see how the tribunal interprets these provisions, and how they interact with the current principles relating to ‘without prejudice’.