by Laurie Anstis on June 20, 2012
The Enterprise and Regulatory Reform Bill was expected to be the vehicle for the government’s promised reform of compromise agreements.
As originally presented to Parliament, the only element of the Bill that related to compromise agreements was clause 16, which simply renamed compromise agreements as “settlement agreements”.
It later emerged that the government was intending to introduce further amendments in the committee stage of the Bill. Those amendments were tabled yesterday.
The amendments add a new section 111A to the Employment Rights Act 1996, as follows:
“111A Confidentiality of negotiations before termination of employment
(1) In determining any matter arising on a complaint under section 111 [an unfair dismissal claim], an employment tribunal may not take account of any offer made or discussions held, before the termination of the employment in question, with a view to it being terminated on terms agreed between the employer and the employee.
This is subject to the following provisions of this section.
(2) Subsection (1) does not apply where, according to the complainant’s case, the circumstances are such that a provision (whenever made) contained in, or made under, this or any other Act requires the complainant to be regarded for the purposes of this Part as unfairly dismissed.
(3) In relation to anything said or done which in the tribunal’s opinion was improper, or was connected with improper behaviour, subsection (1) applies only to the extent that the tribunal considers just.
(4) The reference in subsection (1) to a matter arising on a complaint under section 111 includes any question as to costs, except in relation to an offer made on the basis that the right to refer to it on any such question is reserved.
(5) Subsection (1) does not prevent the tribunal from taking account of a determination made in any other proceedings between the employer and the employee in which account was taken of an offer or discussions of the kind mentioned in that subsection.”
This is effectively what the government had been previously calling a “protected conversation”, but it only applies to a very limited extent.
First, it is only comes into play on an unfair dismissal claim. Discrimination claims and, for instance, breach of contract claims, will not be affected by the new rules. If a discrimination claim is brought at the same time as an unfair dismissal claim, it seems that the “protected conversation” can be taken into account in the unfair dismissal claim as well as the discrimination claim – at least if those are to be considered “other proceedings”.
Second, it doesn’t apply in any of the automatic unfair dismissal situations, such as whistleblowing.
Third, it does not apply (or only applies to a limited extent) where the behaviour of the employer has been “improper”. Expect plenty of argument about what that might mean and, of course, a tribunal is going to have to hear all about the protected conversation in order to determine whether or not the behaviour has been improper.
It is also notable as the first legislative recognition of the practice of making offers “without prejudice save as to costs” in the employment tribunal.
It will be interesting to consider how these provisions will apply in cases of constructive dismissal. These days an employee will sometimes resign in response to such a conversation with their employer and claim, rightly or wrongly, to have been constructively dismissed. How will this work under the new rules? A constructive dismissal claim will often be alleged to be both a breach of contract and an unfair dismissal. It appears that under these rules the protected conversation can be taken into account on the breach of contract claim but not on the unfair dismissal claim. Or will the determination of the breach of contract claim then allow the protected conversation to be taken into account for the unfair dismissal claim under s111A(5)?
The Enterprise and Regulatory Reform Bill is being scrutinised by Parliamentary committee all this week, with the committee taking evidence from various organisations and individuals. The committee’s hearings can be viewed live online here.
[Update 20 June 2012: I've done a follow-up post on the proposed s111A(5) here.]