An employment relationship can sometimes run its course necessitating a frank conversation with an employee. It may be in the best interests of both parties to bring the employment to an end by way of a settlement agreement.
Often, the best way to start that process is by having a protected conversation.
What is a protected conversation?
The law allows an employer and an employee to have an ‘off-the-record’ conversation in certain circumstances.
If you or your employee are proposing to end your employment on agreed terms, the conversation can be kept confidential. This means that what you say can’t be used as evidence in an unfair dismissal claim. Although there are some exceptions, generally the conversation is protected.
What are the exceptions?
Protected conversations cannot be held in situations where dismissals are automatically unfair, such as those involving health and safety matters or where the protection of the Public Interest Disclosure Act is invoked. Neither is protection afforded to breach of contract or discrimination claims. This can be a problem. An employer may not know what issues are going to be raised by an employee during a protected conversation so always take advice from an HR professional and research as much of the history about the employee beforehand as you can. Recognise that in some situations having a protected conversation many not be the best route to take.
What should you do if you want to have a protected conversation with an employee?
If you’re planning to have a protected conversation with your employee, make sure you prepare in advance. You need as much information as possible. You may find it helpful to ask/research questions like:
- Why are you proposing to terminate the employment?
- Has the employee got a history of anything that might be relevant – grievances, disputes, sickness absence etc
- How much are you offering and how has that been calculated? (Any notice pay would be taxable)
- Will you expect your employee to work their notice period?
- Will you be offering a reference?
- What is the alternative if you don’t agree to a settlement agreement? I.e. manage their performance under an internal procedure which may result in termination for poor performance and notice pay only OR investigate an alternative role in the company?
Your employee is not under any obligation to accept any proposed settlement agreement. In fact, the law doesn’t allow anyone to accept it until they have taken independent legal advice on it (paid for by the employer usually capped at £350 plus VAT)
Ask your employee to confirm (once they have thought about it) whether they would like you to confirm the proposal in writing. This could be a draft settlement agreement or simply a letter or email. This will help you to clarify what is being offered but always ensure that any subsequent correspondence has ‘without prejudice’ in the title or heading.
Can an employee initiate a protected conversation?
Although a protected conversation is usually initiated by the employer, an employee can also request one, provided that it is with a view to agreeing a settlement agreement.
If your employee states that they’re willing to have an off the record conversation, you can go ahead with a protected conversation if you are minded to agree a settlement with them to leave. Let them know that the details of the conversation should be kept confidential because it’s with a view to reaching a settlement agreement. Make written notes of the conversation you have had.
At the meeting, you could propose a settlement agreement yourself or you could ask your employee to make a suggestion for you to consider.
Although the most important aspect of a settlement agreement is usually the financial amount, you should consider non-monetary aspects such as:
- a detailed reference
- career coach support (professional help with finding another job)
- release from anything in your employment contract that restricts you after the end of your employment
- paying for a training course
What happens next?
You should give a reasonable period of time for your employee to consider any proposed settlement agreement. ACAS recommends 10 days, although employers rarely give this long in practice.