Protected Conversations Under s.111A ERA 1996: Key Insights from Employment Appeal Tribunal Decision

EAT decision provides insight on the boundaries of protected conversations

Section 111A of the Employment Rights Act 1996 (ERA) was introduced to encourage employers and employees to engage in frank, open discussions about termination of the employee’s employment without the fear that these discussions would later be used as evidence in tribunal claims. This section, and the conversations held under them, are generally called ‘protected conversations’ and employers may refer to them as such, s.111A, pre-termination negotiations, or having an ‘off the record conversation’ when seeking to invoke it. Unlike the without prejudice rule, which also allows parties to have such types of conversation, s.111A does not require the parties to be in dispute to apply.

S.111A is limited in that it applies only to claims for ordinary unfair dismissal. Evidence from protected conversations can still be admissible in cases involving allegations of discrimination, harassment, victimisation, automatic unfair dismissal or other breaches of statutory rights.

Conversations held under s.111A may also be admissible in tribunal if the employer’s conduct during them is deemed ‘improper’. Examples of this include bullying, harassment, significant pressure or coercion.

The Acas Code of Practice on Settlement Agreements (the ‘Code’) provides guidance including a section on ‘improper behaviour’ and noting that s.111A will not apply where improper behaviour regarding the settlement discussions or offer takes place. It provides examples of this (noting the list is not exhaustive) such as harassment, bullying and intimidation, physical assault or threat of it and criminal behaviour. Also provided as an example of improper behaviour is putting undue pressure on a party by not giving reaosnable time to consider an offer or that if a settlement is rejected the employee will be dismissed.

Failure to follow the Code does not of itself make a person or organisation liable to proceedings, and whilst it is not binding, Tribunals will take it into account when considering relevant cases. The Code discusses settlement agreements in several contexts and mentions disciplinaries and grievances, but it does not mention redundancies.

A recent EAT decision considered the boundaries of s.111A following claims made by a claimant that the rule should not have applied to their conversations with a former employer on the grounds that the employer acted ‘improperly’.

Case: Gallagher v McKinnon’s Auto and Tyres Ltd [2024]

Mr. Gallagher, who was employed as a branch manager at McKinnon's Auto and Tyres Ltd (MAT), lodged a claim for unfair dismissal following termination of his employment in August 2022. As part of his claim he contended that evidence from pre-termination discussions held between him and MAT should be admitted on the basis that his employer had acted ‘improperly’ when seeking to rely on s.111A.

Mr. Gallagher’s arguments around MAT’s conduct included that MAT had misled him by introducing a protected conversation during what was described as a ‘return to work’ meeting following a period of absence. MAT then offered Mr. Gallagher an enhanced redundancy package subject to the terms of a settlement agreement and gave him 48 hours to decide, which Mr. Gallagher argued was unreasonably short and contrary to the Acas Code, which recommends a period of 10 days for such considerations.

Mr. Gallagher also alleged that MAT suggested that his position was redundant and that his role would be taken over by other directors at the company, implying that he would be dismissed if he did not accept the offer.

The first-instance decision of the Employment Tribunal was that MAT’s conduct was not ‘improper’ conduct that would render the pre-termination conversations admissible as part of the claim.

The Tribunal found that Mr. Gallagher was given an opportunity to seek advice and consider the offer, identifying that the 48-hour limit was applied only to the initial verbal offer and that, if Mr. Gallagher verbally agreed, further negotiations could take place in relation to the written terms of the agreement. The Tribunal did not consider this to apply undue pressure. Despite the meeting's purported misleading description as being about his ‘return to work’, the Tribunal did not find this to amount to improper behaviour.

Finally, on the facts, the Tribunal concluded that MAT telling Mr. Gallagher that his role would be taken over by others was not the same as saying he would be dismissed. It was possible in a redundancy situation that Mr. Gallagher may have remained employed by MAT, albeit in a different position. Therefore, the Tribunal determined that MAT did not make a threat of dismissal.

Appeal

Mr. Gallagher appealed on the grounds that the Tribunal finding that there was no impropriety was ‘perverse’. In particular, Mr. Gallagher reiterated that he was put under undue pressure by MAT’s deception in how it described the meeting, the time Mr. Gallagher had to respond to the offer and the alleged implication that he would be dismissed if he rejected the offer.

The EAT upheld the Tribunal’s original decision, dismissing the appeal.

The EAT agreed with the Tribunal’s finding that the 48-hour time period to accept the offer was correctly identified as applying to the verbal offer and that the pre-termination negotiations would have continued if he had accepted the verbal offer and would subsequently have been presented with written terms of a settlement agreement to consider. The EAT also noted that the Acas Code applied to disciplinary matters, not redundancy situations, and so the guidance in the Code was not definitive here. 

The EAT did recognise that MAT’s use of the return to work meeting to introduce the protected conversation may be considered unfair, but that of itself was not sufficient to meet the ‘improper conduct’ standard required to lift the protection of s.111A in Mr. Gallagher’s favour. 

Comment

This decision highlights a useful practical example of the standards expected of employers when engaging in pre-termination discussions and, in particular, that an employer will need to go further than acting ‘unfairly’ to meet the ‘improper conduct’ standard required to lift the protections of s.111A.

That said, employers should remain cautious and mindful of the expectations of their conduct around pre-termination negotiations. It would help employers to stay clear of the areas that led to disputes in Gallagher, for example by providing up to 10 days for an employee to consider the initial heads of terms of an offer before sending a full agreement and avoiding, where possible, using meetings held under different staff management processes to introduce s.111A conversations.