The Art of Dismissal: Are employers taking sufficient advantage of confidential pre-termination negotiations?

The introduction of new rules in 2013, allowing employers to hold "pre-termination negotiations" with employees, without evidence of those discussions being admissible in a future unfair dismissal claim, was welcomed by employers as a positive development.

The changes, which were introduced under the Enterprise and Regulatory Reform Act 2013, mean that employers are able to raise the possibility of termination with an employee without the need to follow a full (or indeed any) procedure and without fear of the discussions being used against the employer, in the event that the negotiations break down. Such negotiations can be particularly useful in the context of underperforming employees, with successful negotiations resulting in an agreed termination, with a settlement agreement.

At Steeles Law, we are finding that some employers are not taking advantage of the new rules, either because of lack of knowledge regarding them, or concerns about the consequences of getting it wrong. But just how vulnerable is an employer when it starts having such conversations with a poorly performing employee, which then break down and to what extent does this prejudice any subsequent formal performance management process? It cannot be denied that there are potential traps for the unwary. For example, the rules only apply in relation to claims of "ordinary" unfair dismissal; if an employee subsequently brings a claim for discrimination, or a claim for one of the automatically unfair reasons (for example, whistleblowing), evidence of a pre-termination discussion will be admissible. Employers must also be careful not to engage in what is known as "improper behaviour" in the manner in which it deals with the confidential settlement discussions, for example by bullying or harassing the employee, or placing undue pressure on them to accept the terms on offer.

However, these potential pitfalls should not discourage employers from having protected conversations with underperforming employees. Performance management processes are lengthy and can be difficult to deal with fully and fairly; it is perhaps for these reasons that many managers shy away from them, with the result that businesses often retain poorly performing individuals for far too long. Where performance management processes are undertaken, it is often at the point when the business has already decided that the employee is not up to the job and no longer wants to retain him or her. The managers and the HR professionals involved in the process can then be involved in a dishonest hoop jumping process, which can be demoralising for all concerned. Having a confidential discussion with that employee, with a view to agreeing mutually acceptable exit terms, not only makes much better business sense but can often also allow the employee concerned to leave with dignity.

It is essential, of course, that the manager engaging in the confidential discussions with the employee is aware of the limitations and is careful with the language he or she uses and the manner in which he or she broaches the subject. There is no "one size fits all" approach but by following a few simple guidelines, it is possible to have a properly protected conversation which, in many instances, will result in the desired effect of mutually agreed termination, achieved relatively swiftly and with the protection of a settlement agreement.

Employment law experts from Steeles Law will be providing further detail and guidance regarding pre-termination negotiations at the forthcoming HR Forum on 9 September 2015. We will offer practical guidance on how to have good protected conversations, whilst making sure that you are also aware of the limitations.

We will also be looking more generally at the art of dismissal, in particular the more tricky aspects, such as: Cumulative incidents and prior warnings; "bumping" and redundancy selection; maternity dismissals; TUPE related dismissals; and the removal of senior executives.

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