How to approach pre-termination negotiations about a settlement agreement

By Darren Newman, Brightmine Consultant Editor

Many employers will recognise the appeal of being able to agree a termination settlement with an unsatisfactory employee rather than having to go through a lengthy disciplinary, grievance, redundancy or performance improvement procedure. However, employers may be concerned that, by entering into negotiations, they will put themselves at risk of an unfair dismissal claim at the outset.

In our guide, we explain the legal context and effect of s.111A of the Employment Rights Act 1996, which aims to exclude evidence of “pre-termination negotiations” from unfair dismissal claims. We look at some of the difficulties employers may face when relying too heavily on the provisions in s.111A, and consider the extent to which pre-termination negotiations can be conducted in a reasonable way without the need to invoke the provisions.

In this guide, learn about:

• Recognising that a negotiated settlement can be an attractive alternative to a formal procedure.
• Understanding the “without prejudice” principle and be aware that it applies only in relation to an existing dispute.
• Understanding the effect of the rules on protected conversations under s.111A of the Employment Rights Act 1996.
• Being aware of the circumstances in which pre-termination negotiations will not be protected by s.111A and will be admissible evidence in a tribunal.
• Depending on the circumstances, considering whether to begin a performance improvement, disciplinary or redundancy procedure before initiating a settlement discussion.
• Acting reasonably, with a view to being able to defend an unfair dismissal claim even if the pre-termination negotiations are found to be admissible.
• When initiating a conversation about terminating employment on agreed terms, making it clear that this is only one option, and termination is not the inevitable result.
• Following a conversation, setting out the details of any offer in writing, emphasising that no decision has been made at this stage.
• Giving the employee time to consider the offer.
• If the employee does not accept the offer, continuing with the relevant formal procedure.
• If the employee does accept the offer, confirming the terms using a settlement agreement.