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Termination negotiations

without prejudice subject to costs

What is a protected conversation?

Section 111A of the Employment Rights Act 1996 (ERA 1996) allows you or your Employer to have off the record, confidential termination negotiations about leaving the job with a settlement agreement. Details of these discussions cannot be placed in evidence before a Court or Employment Tribunal if the settlement negotiations break down. Basically, you agree to payment of a sum of money, in exchange for not suing your Employer. Note however, that it only applies to unfair dismissal claims.

It is similar to the Without Prejudice Rule, but with an important difference. For the Without Prejudice rule to apply there must be an existing dispute between you and your Employer. Section 111A allows Without Prejudice discussions to take place where there is no existing dispute. For this reason, it is called a “Protected Conversation”. [see Without prejudice communications and discussions, Without prejudice subject to costs offers and the Employment Tribunal ]. Because your Employer can start a protected conversation without an existing dispute, some will not bother with disciplinary proceedings, so you can get completely sideswiped by a pre-termination discussion.

Protected conversations are guided by the ACAS Code of Practice 4 – Settlement Agreements, and the accompanying Guidance on Settlement Agreements. Failure to adhere to the ACAS Code on Settlement Agreements may remove the protection of Section 111A ERA 1996, from settlement communications and make them admissible in the Employment Tribunal or Court.


When does the protected conversation principle NOT apply

  • The protected conversation principle only applies to unfair dismissal claims. If you believe that the offer was made for discriminatory reasons you can still start a claim in the Employment Tribunal. It also does not apply to automatically unfair dismissals,  wrongful dismissal or unauthorised deduction of wage claims.
  • The principle will not apply where there is improper behaviour during the negotiations, for example harassment, bullying and intimidation, physical assault or the threat of it, discrimination and putting undue pressure on the other party [see Perjury, blackmail or other unambiguous impropriety]. It is the Employment Tribunal that decides whether there has been improper behaviour, based on the facts.

Heads up!

  • You can initiate pre-termination negotiations with your employer. It is a good strategy to use where you know you are guilty of a disciplinary allegation and will likely be dismissed. You can use it to negotiate a basic reference at the very least. [see Letter before claim]
  • You cannot use your Employer’s initiation of pre-termination negotiations as a reason to resign and claim constructive dismissal.
  • If you are making the offer, you can mark it as “Without Prejudice Subject to Costs”. This way you reserve the right to refer to it in your costs application if you go to the Employment Tribunal and win. [see Without prejudice subject to costs offers and the Employment Tribunal]
  • You will receive (or give) 10 days to consider the offer. If you receive an offer your Employer should pay for you to take legal advice on the draft terms of settlement.
  • Once you have engaged in a protected conversation, neither you nor your Employer can waive the protection, even if you both agree to do so.

Updated: 16/03/2020

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