Pre-Termination Negotiations: what happens if they break down?

The opportunity for an employer to hold a pre-termination negotiation with an employee under s.111A Employment Rights Act 1996, to explore possible termination of employment on an off the record basis, is a very useful way to avoid prolonged workplace disputes.

What happens, though, if the discussion breaks down, an unfair dismissal claim is made, and the claimant wants to tell the tribunal that there was such a discussion, without going into its contents (which the law plainly does not allow when an employer has behaved properly)?

The Employment Appeal Tribunal’s recent decision in Faithorn Farrell Timms LLP v Bailey has resolved the point. The principle that allows genuine pre-termination negotiations to remain secret does not simply apply to the contents of the discussion. It extends to the mere fact that there has been such a negotiation. And it does not simply protect the direct discussions between employer and employee. It extends to internal discussions within the employer, for instance between a manager and an in house HR advisor.

In this particular case, where it was alleged that the pre-termination negotiation had in itself involved sex discrimination, the employer chose initially to waive privilege for its own tactical reasons, and was not allowed to renege on this. But the principle of secrecy remains good.

There will of course be practical problems. What if a tribunal notices an apparently inexplicable gap in the course of pre-claim correspondence, and seeks to hold that against one of the parties (for instance, in the context of not delaying unduly before claiming constructive dismissal)? This still does not allow any mention of a pre-termination negotiation. As the EAT put it in this case, “employers and employees do not have to stop communicating openly just because pre-termination discussions are taking place behind the scenes; a gap in their open communications may well be relevant to an unfair dismissal claim.” Sound advice.

This is not, of course, a green light for an employer to engage in a pre-termination negotiation in obvious (or indeed implicit) bad faith, or to go about it oppressively. Legal privilege can still be lost that way.

Are you involved in a live pre-termination negotiation, or thinking of holding one, and feel you may need further advice? Please get in touch.

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