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December 13, 2016

Tribunal Tale – Protected conversations

Mishandled protected conversation leads to successful constructive dismissal claim

A former employee of a foreign exchange company has successfully claimed constructive unfair dismissal due to the company mishandling a pre-termination negotiation.

Section 111A of the Employment Rights Act allows an employer to have a ‘protected conversation’ with an employee for the purposes of determining whether an exit can be agreed with the employee, usually in return for a payment. The conversation is called ‘protected’ because, if conducted correctly, the pre-termination negotiations cannot be used as evidence in any subsequent unfair dismissal tribunal proceedings.

Such conversations can be helpful to an employer that wishes to secure a quick termination as opposed to conducting a formal procedure such as redundancy or performance management. However, section 111A does not give employers carte blanche to say or do anything during the conversation; any improper behaviour on the part of the employer will generally remove the protection.

‘Improper behaviour’ in this context can include issuing ultimata (e.g. accept or be sacked), not giving sufficient time to consider the offer (10 days under the relevant ACAS Code) and threatening or discriminatory behaviour.

In Lenlyn UK Ltd v Kular, the employer sought to have a protected conversation following a loss of money due to being defrauded by a bogus contractor. An externally-led investigation into the incident found no internal dishonesty but suggested that the claimant could be investigated for negligence for failing to monitor the contractor.

The claimant was called to a meeting on 16 December and told that the investigator had concluded that the claimant was ‘grossly negligent’. The claimant was given a settlement offer and told to respond by 22 December. He was also told not to come to work until he had decided.

The claimant then discovered that his access to his employer’s IT systems had been removed. In response, he resigned from his employment and brought a claim of constructive unfair dismissal.

The Employment Tribunal accepted his claim and found that the conversation on 16 December was admissible as evidence, for two reasons. First, the claimant was not given a reasonable amount of time to consider the offer and, second, the employer was dishonest in relation to the findings of the investigation. At no point had there been a finding of gross negligence.

The employer appealed but unsuccessfully. The Employment Appeal Tribunal found that the employer had already decided that the claimant was guilty of misconduct by the time the meeting of 16 December took place and that that breach of the claimant’s trust and confidence entitled the claimant to resign. It also went on to state that the dishonesty surrounding the results of the investigation was also a breach of trust and confidence.

This case is a reminder that the protected conversations regime has to be handled carefully and does not give employers a free pass to act however they please. Employers considering making a termination offer should ensure that they act reasonably and honestly and give the employee sufficient time to consider the offer.

If you have any questions on any of the issues raised in the above article, or would like to discuss making a settlement offer to an employee, please contact Seanpaul McCahill.

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