Protected conversations & improper conduct

Gallagher -v- McKinnon’s Auto and Tyres Ltd [2024] EAT 174

In this case, the Employment Appeal Tribunal (“EAT”) assessed whether the Respondent's behaviour during pre-termination negotiations with the Claimant amounted to improper behaviour, and if the content of the pre-termination negotiation was therefore admissible in employment tribunal proceedings. 

Pre-termination negotiations (also known as protected conversations) are an integral part of confidential settlement negotiations between an employer and an employee. They typically cannot be referred to in an ordinary unfair dismissal claim unless the tribunal deems the conversation or actions 'improper'. Although there is no clear-cut legal definition of 'improper’, one example provided in the ACAS code of practice on settlement agreements is "putting undue pressure on a party". 

The Claimant claimed unfair dismissal following redundancy. During the proceedings, the Claimant attempted to cite pre-termination negotiations and correspondence in which the Respondent had offered him an enhanced redundancy package in return for agreeing to certain terms for departure. In a preliminary hearing, the Employment Tribunal (“ET”) decided these discussions were a 'protected conversation' and therefore inadmissible. As the Respondent had not acted improperly, the Claimant was not permitted to refer to these discussions in the unfair dismissal proceedings.

The Claimant appealed the ET’s decision. He argued that the Respondent had applied undue pressure during the protected conversation by (i) stating that a redundancy process would begin if he declined the offer; (ii) inviting him to a return-to-work meeting under "false pretences," where he was unexpectedly offered settlement terms; and (iii) only allowing him 48-hours to accept the verbal offer. He therefore argued that the Respondent had acted improperly and the content of the conversation should be admissible as evidence of his unfair dismissal. 

The EAT dismissed the Claimant’s appeal. It decided that the ET was right to conclude that the Respondent had not acted improperly. In particular: 

1. informing the Claimant about the commencement of a redundancy process if he did not accept the offer did not equate to telling him he would be dismissed;
   
   
2. while it may have been unfair to discuss settlement terms unexpectedly during the return-to-work meeting, it did not mean the Respondent had lied or exerted undue pressure during the meeting; and 
   
   
3. the 48-hour deadline for the settlement offer did not constitute undue pressure. The 48-hour period only related to whether the Claimant would accept a verbal offer and if the verbal offer had been accepted, this would have been followed by a written offer with a settlement agreement and additional time would have been given to consider it.

The case has now returned to the ET to proceed with the unfair dismissal claim, disregarding evidence from the pre-termination negotiation.

Whilst this case demonstrates the support of the tribunals for such protected conversations and will therefore be reassuring for employers, it also serves as an important reminder that, although protected conversations can facilitate agreed terminations, they should be approached with utmost caution. Any missteps can potentially undermine the legal protection they afford. The ET’s decision that a 48-hour window to consider a settlement proposal is reasonable will be useful for employers. However, employers must still be vigilant to ensure that such conversations are conducted without exerting undue pressure, thereby maintaining the integrity of the process and ensuring that they cannot be used as evidence in any potential subsequent unfair dismissal claims.