When can an employer have a protected conversation?
An employer can propose ending employment on agreed terms at any stage, even with no existing dispute. Under section 111A of the Employment Rights Act 1996, those pre-termination negotiations are generally inadmissible in an ordinary unfair dismissal claim, but not in discrimination or automatically unfair dismissal claims, and not where there has been improper behaviour.
What section 111A protects
Section 111A covers offers made or discussions held before termination with a view to ending employment on agreed terms. The Acas Code of Practice on settlement agreements says this protection can apply even where there is no current dispute, or where one party is unaware of a problem.
Acas notes that settlement discussions are sometimes called protected conversations.
What it does not cover
Where there is an existing dispute, the separate common law without prejudice principle may also protect genuine settlement discussions, unless there is unambiguous impropriety.
- Claims for automatically unfair dismissal, such as whistleblowing, trade union reasons or asserting a statutory right
- Discrimination, harassment and victimisation claims under the Equality Act 2010
- Breach of contract and wrongful dismissal claims
- Anything said or done that a tribunal considers improper, to the extent it considers just
Improper behaviour
The Acas Code gives examples including harassment, bullying and intimidation, victimisation, discrimination, and putting undue pressure on someone. Undue pressure includes not allowing reasonable time to consider an offer, or saying before any disciplinary process has begun that the employee will be dismissed if they reject the offer.
Setting out reasons neutrally, or factually stating likely alternatives such as starting a disciplinary process, is not improper.
Good practice
The Acas Code recommends, as a general rule, at least 10 calendar days to consider formal written terms and take independent advice, unless the parties agree otherwise. There is no legal right to be accompanied, but Acas says allowing a companion is good practice.
The law
“Evidence of pre-termination negotiations is inadmissible in any proceedings on a complaint under section 111…”
“subsection (1) applies only to the extent that the tribunal considers just…”
Sources
- Settlement Agreements (under section 111A of the Employment Rights Act 1996) · Acas
- Confidentiality - Settlement agreements · Acas
- Discussing and negotiating an offer - Settlement agreements · Acas
- Plan to Make Work Pay and Employment Rights Act: timeline update · GOV.UK
General information for employers in Great Britain, not legal advice. Check the official sources for your situation.
- Unfair dismissal qualifying period expected to reduce to 6 months for dismissals from this date (subject to Parliament)
Future dates are expected dates and depend on Parliament.
What employers can do
- Check whether discrimination, whistleblowing or other risks mean section 111A would not apply
- Explain the reasons for the proposal neutrally and say the offer is voluntary
- Make clear the employee can negotiate and take independent advice
- Allow at least 10 calendar days to consider written terms, longer where adjustments are needed
- Keep settlement discussions separate from any performance or disciplinary process
Related answers
- What makes a settlement agreement valid? To waive employment tribunal claims, a settlement agreement must be in writing, relate to particular complaints or proceedings, and follow advice to the employee from an insured, relevant independent adviser who is named in the agreement. It must also state that the statutory conditions are satisfied. A general 'full and final settlement' clause is not enough.
- How should a performance improvement plan work? There is no statutory definition of a performance improvement plan (PIP). Acas guidance says that, if informal steps do not work, a PIP should set specific objectives, a reasonable timeline and any support or training needed, be discussed with the employee and confirmed in writing, and make clear what happens if performance does not improve.
- When does the unfair dismissal qualifying period change to six months? The qualifying period for ordinary unfair dismissal claims falls from two years to six months on 1 January 2027. The new rule applies wherever the effective date of termination is on or after 1 January 2027, even if notice was given earlier. The cap on unfair dismissal compensatory awards is removed from the same date.