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12 August 2016

Faithorn Farrell Timms LLP v Bailey

In Faithorn Farrell Timms LLP ("FFT") v Bailey, the EAT reviewed the admissibility of pre-termination settlement negotiations when the case included a claim for discrimination alongside unfair dismissal.

Background

Pre-termination settlement negotiations are a relatively new concept contained in section 111A Employment Rights Act 1996 (‘ERA’) which came into force in July 2013. There are rules to govern what are and are not protected conversations which are outside the scope of this article. The idea of the protection is to and enable greater flexibility to employers and employees in finding amicable solutions.

The Facts

B was a secretary employed by a firm of surveyors, FFT. She was a part time worker which, towards the end of 2014, was no longer a viable working arrangement. B therefore initiated verbal pre-termination settlement negotiations in December 2014 and they were formally in dispute from January 2015 when B’s solicitors wrote a letter marked “without prejudice – subject to contract”.

That letter was mostly a statement of her legal position with a short reference to settlement at the end. FFT replied with a letter that was not marked without prejudice. Again, this letter was mostly setting out their position with a short reference to settlement as its conclusion. The correspondence went back and forth in exactly the same way once more.

The pre-termination settlement negotiations were unsuccessful and B resigned in February 2015. She had raised an internal grievance which referred to her pre-termination settlement negotiations as well as her without prejudice correspondence.

She made a claim for unfair constructive dismissal and discrimination. In the claim form there was reference to, and reliance placed on, these negotiations and FFT did not object to its admissibility in their Tribunal response.

The ET

This case deals only with the pre-trial issue of the admissibility of the pre-termination settlement negotiations.

The Tribunal at first instance found that the correspondence was not wholly inadmissible under section 111A ERA, nor were they by the without prejudice rule. Their content was not admissible but the fact of their existence was. A large part of the reasoning was that there was a claim other than unfair dismissal because section 111A ERA only applies to that claim. It found specifically in relation to section 111A ERA that it only restricted details of the negotiations from being used as evidence, leaving the fact that they took place admissible.

Neither party was entirely successful and so both appealed for different reasons.

The EAT

The EAT had an entirely fresh approach. It held that section 111A affords protection to the fact that negotiations have taken place, not just the detail. It also considered the employers internal discussions and emails between management and HR; these were held inadmissible as well.

However, it noted that section 111A ERA only refers to unfair dismissal claims. The rigidity with which it is written meant that the entirety of the pre-termination negotiations are admissible in respect of other claims, such as for discrimination, albeit inadmissible when deciding the unfair dismissal claim. Such is the level of protection afforded by section 111A ERA that the EAT also concluded that the parties cannot agree to waive the privilege held by genuine pre-termination negotiations.

Comment

The EAT have adopted a pragmatic approach so that the evidence can only be used to support the unfair dismissal claim. The issue here is that the same tribunal will decide the unfair dismissal alongside the other claim.

It is clear that s.111A ERA discussions remain only under the protection afforded for unfair dismissal claims and employers should be wary of using them in any circumstances where other claims may arise.

http://www.bailii.org/cgi-bin/format.cgi?doc=/uk/cases/UKEAT/2016/0025_16_2806.html