Currently, ‘off the record’ conversations with employees about severance arrangements are governed by the without prejudice rule. If an employer proposes to an employee that they exit the business before there is an ‘on the record’ dispute (i.e. before a dismissal or discrimination claim is contemplated by the employee) that conversation is not ‘off the record’ at all, and can in fact be referred to in subsequent court proceedings.
From 29 July 2013 it will be possible to have a conversation with an employee about ending their employment on terms, even when there is no existing dispute. These settlement discussions cannot be used as evidence in most unfair dismissal claims if negotiations break down.
However, if there are other claims which the employee brings to court, such as discrimination, the rules do not apply and any discussion will be admissible in court. The discussion will also become admissible if there is some ‘improper behaviour’ by the employer during settlement discussions. Improper behaviour could include undue pressure or threats to sack if the offer is not accepted.
A new ACAS Code provides further guidance, and recommends, for example, that the employee has at least ten calendar days to consider a draft settlement agreement with his/her lawyer, and that employees should have the right to be accompanied at any settlement discussion meeting. This will be an unwelcome change for employers who are used to a much swifter, and completely confidential, process.