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The pitfalls of protected conversations

Negotiating the exit of an employee is one of the hardest jobs faced by HR professionals. Although the personal aspect is likely to be tough, from a legal point of view, pre-termination negotiations – often referred to as 'protected conversations' – can help mitigate risk, as long as certain requirements are met, including there being no 'improper conduct'.

Protected conversations cover discussions between an employer and employee aimed at an agreed termination of employment, and can make raising issues with an employee, such as performance and capability, more straightforward. Importantly, it sets these discussions apart from rules around 'without prejudice' discussions, as there is no requirement for a current dispute between employer and employee for a protective conversation to take place. Should an employee subsequently bring an unfair dismissal claim, protected conversations are inadmissible as evidence. The employment appeal tribunal (EAT) upheld this rule in the case of Faithorn Farrell Timms LLP v Bailey last year.

 

Improper conduct

The 2016 Lenlyn UK Ltd v Kular case highlighted the risk of improper conduct. When Mr Kular was suspected of financial negligence, an external accountant recommended Lenlyn consider a full disciplinary investigation. Instead, the company initiated a protected conversation, where Mr Kular was presented with a settlement agreement and given one week to decide whether to sign it. He rejected the offer, resigned and claimed constructive unfair dismissal.

The employment tribunal (ET) had to determine the admissibility or not of the protected conversation. It was ruled to be admissible on the basis of the employer's improper conduct, including the failure of the company to give Mr Kular reasonable time to consider the agreement and putting unreasonable pressure on him.

The ET took into account that Acas recommends, as a general rule, that employees are given at least 10 calendar days to consider a written agreement and seek legal advice. Mr Kular was given just six days to consider an offer or it would be withdrawn. There was no indication that this restricted time period could be extended, despite the pending Christmas holidays, and the ET found the reason for the short timescale was 'unacceptable'.

Additionally, the company misrepresented the findings of the external accountant both in its letter to Mr Kular and at the meeting with him. He was told the report concluded there had been gross negligence, while it actually only recommended there should be an investigation.

In this way, the company made a dismissal look much more of a foregone conclusion. This was exacerbated by Mr Kular being cut off from email access before the date that the offer was to lapse. The EAT dismissed the employer’s appeal, noting that, in pre-judging the issue ahead of the protected conversation, the company no longer intended to be bound by the employment contract. This was a breach of trust and confidence, entitling Mr Kular to resign.

 

Lessons to be learned

This case serves as a reminder for HR professionals to be careful about protected conversations and highlights two clear pitfalls:

  • There is a risk of presenting the offer as a done deal at an early stage. To avoid this, management must make sure the employee understands that there are other options available to them, and what those options might be.
  • It is clear that the employer must also give the employee reasonable time to consider the offer. HR staff must also be prepared to answer any questions the employee may have, particularly if the discussion comes out of the blue and is particularly sensitive.

Protected conversations do not give employers carte blanche to say and do what they like in any circumstance. Presenting an ultimatum or trying to speed up the process unreasonably could leave HR without the protection they were looking to achieve by having the protected conversation in the first place.

 

Claire McKee is a senior solicitor in the employment, pensions and immigration practice at Maclay Murray & Spens

 

Added: 10-03-2017
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