Emma Burrows, employment law specialist at Trowers & Hamlins Solicitors, takes a look at employment relationships.

Employment relationships come to an end in many different ways; often it will be the case that an employer follows its own procedures to dismiss an employee, but in other circumstances (perhaps because of the seniority of the individual, the sensitivity of the issue or because the dismissal is time critical) an employer will avoid following detailed procedures and instead offer the employee a package to depart.

The difficulty employers have always faced in conducting such conversations with employees is that there is never a guarantee of the employee accepting the package and “going quietly”. There is always the risk that conversations are used against the employer at a later date; perhaps the employee claims that the conversation itself evidenced discrimination on the part of the employer, or the employee resigns and claims that conversation itself constituted a fundamental breach of the employment relationship entitling the employee to claim constructive dismissal.

In order to avoid the risk of such discussions being used against organisations in the future, many employers have sought to use the principle of “without prejudice” to prevent details of conversations being used or revealed in subsequent employment tribunal proceedings.

The label of “without prejudice” is usual when parties who are corresponding on or discussing the settlement of a dispute, as without prejudice correspondence or discussions cannot subsequently be revealed or referred to in any Court or Employment Tribunal. Readers will no doubt be familiar with the principle when, for example, settling Employment Tribunal claims.

Recent Cases
In the case of BNP Paribas v Mezzotero, the employer, BNP Paribas, met Ms Mezzotero midway through her grievance process and explained that the meeting was without prejudice. The employer then went on to offer Ms Mezzotero a settlement package in return for dropping her grievance and leaving employment. Ms Mezzotero refused to accept the package and commenced Employment Tribunal proceedings for sex discrimination.

Ms Mezzotero wished to use the evidence of that meeting to support her claims of discrimination. BNP Paribas argued that the meeting was without prejudice and so could not be relied on as evidence.

The Employment Appeals Tribunal had to consider whether the meeting was truly without prejudice, i.e. were the discussions that took place in that meeting for the purposes of settling a dispute?

The EAT decided that an employee grievance issued against her employer was not a dispute, and so without prejudice meetings could not be held to settle it. This meant Ms Mezzotero could use this evidence in tribunal.

Where does this leave employers? Would it ever be possible for an employer to discuss the possibility of severance package without running the risk of those discussions being used in evidence against it?

Another case that may cause difficulties for employers who wish to hold such conversations. In Billington v Michael Hunter & Sons Mrs Billington met with her employers who offered her the choice of resigning and taking a severance package, or remaining in employment and being subject to a disciplinary process relating to customer complaints. The EAT held that offering such a stark choice to an employee without reasonable and proper cause could constitute a fundamental breach of the implied duty of mutual trust and confidence, thus allowing the affected employee to resign and claim compensation for constructive dismissal.

Principal Guidance
Undoubtedly, there is no way to prevent “off the record” conversations creating risk for the employer. It is clear now that a dispute between employee and employer must go further than a grievance, we do not know what would constitute a dispute in employment.

In future, employers should consider carefully before entering into any sort of off the record discussion with an employee.

The following guidance may be useful:

• Think carefully as to whether or not the employee is likely to accept such an offer.
  
• In particular, think carefully about the level of the severance package and whether it would be a sufficient incentive to an employee to leave.
  
• Consider probing the employee to determine what their preferred outcomes would be. A settlement package will be far more welcome where the employee has indicated they wish to leave employment than to one who is adamant they wish to remain.
  
• Ensure that if off the record discussions take place the employer says nothing which could be construed to be discriminatory.
  
• Consider making a file note of the discussions so that should they become part of subsequent litigation the organisation can at least show exactly what was said.
  
• If choices are offered to the employee try to provide more than the “leave or be fired” option.
  
• Ensure that the employer can provide a reason for dismissal – this should minimise the risk of a Tribunal finding that the employer acted without reasonable and proper cause.
  
• Consider following the appropriate procedures concurrently with any discussions, so that even if discussions fail, an employer will be able to terminate employment lawfully afterwards.