Pre-termination negotiations and managing exits

Following the Acas code on pre-termination contracts should help you find an obstacle-free path to dismissing staff, explains solicitor Emma Burrows.

Employers keen to bring the employment of potentially problematic employees to a quick close will have been heartened by the introduction of pre-termination negotiations on 29 July 2013. These are designed to provide a safe route to open discussions for a settlement agreement to bring the employment relationship to an end, without this leading to an unfair dismissal claim.

Acas has published a statutory Code of Practice – the Acas code – on settlement agreements (compromise agreements were renamed settlement agreements as of 29 July 2013), which came into force on 29 July. In addition, non-statutory guidance will be introduced containing good practice points for employers.

What are the practical implications of the new measure?

Pre-termination negotiations will prevent what is stated in a settlement offer, or discussions about it, from being admissible in ordinary unfair dismissal proceedings. This will be the case even where no employment dispute exists. It is the lack of an existing employment dispute that is key. Currently, employers are used to undertaking discussions about settlement on a “without prejudice” basis – which means that they cannot be used in a court or tribunal as evidence – but this is open to them only where an employment dispute is in existence.

Pre-termination negotiations lend employers the freedom to discuss an employee’s departure without having to go through lengthy disciplinary or capability procedures. However, they are not without pitfalls, and it is necessary to be aware of their limitations. With this in mind, we thought it would be useful to run through some dos and don’ts.


The Acas code sets out various good practice points for managing pre-termination negotiations.

  • Even if the initial proposal is made orally, make sure that it is ultimately put in writing in order for it to be legally binding.
  • Allow the employee a reasonable amount of time to consider the offer. As a general rule, Acas recommends a minimum period of 10 days “unless the parties agree otherwise”.
  • Allow the employee an opportunity to discuss the proposals face to face, and agree a time and a place. While stressing that it is not a legal requirement, Acas states that it is “good practice” to allow the employee to be accompanied to the meeting by a colleague or a trade union official or representative.
  • Terminate the employee’s contract either with the required contractual notice, or from a date specified in the agreement.
  • Include details of any payments to be made to the employee and the timing of such payments.


quotemarksPre-termination negotiations will be admissible where any subsequent claims are made -for example, discrimination, harassment, victimisation, breach of contract or wrongful dismissal.”

  • Allow fewer than 10 days for consideration of a settlement offer unless you have specifically agreed that a shorter time frame is acceptable with the employee. The employee will need time to consider the terms of the settlement agreement and receive independent advice.
  • Be unclear about the reason why the settlement offer is being made. The Acas code states that “it may be helpful” if reasons for the proposal are given when the proposal is made.
  • Refuse to accommodate any requests that the employee might make for a meeting to discuss the proposals and consider allowing them to be accompanied.
  • Engage in any “improper behaviour” that may make the pre-termination negotiations admissible in any subsequent tribunal proceedings. Details of what might constitute “improper behaviour” are set out below, although the code (somewhat unhelpfully) states that “what constitutes improper behaviour is ultimately for a tribunal to decide on the facts and circumstances of each case”.

What is “improper behaviour”?

Guidance on what constitutes “improper behaviour” can be found in the Acas code. The code provides some examples, but stresses that these are not exhaustive. The examples are as follows:

  • all forms of harassment, bullying and intimidation, including through the use of offensive words or aggressive behaviour;
  • physical assault or the threat of physical assault and other criminal behaviour;
  • all forms of victimisation;
  • discrimination; and
  • putting undue pressure on a party.

Three examples of “putting undue pressure on a party” are given in the Acas code. The first is not giving reasonable time for the employee to consider the proposed settlement agreement. The second is an employer essentially threatening the employee by saying, before any form of disciplinary process has begun, that the employee will be dismissed if the settlement proposal is rejected. Finally, the code gives the example of an employee threatening to undermine an organisation’s public reputation if the organisation does not sign the agreement.

What are the exceptions?

You will be able to rely on pre-termination negotiations only in straightforward cases of unfair dismissal. If there is an automatically unfair reason for dismissal, then pre-termination negotiations will be admissible in a tribunal. Automatically unfair dismissals include dismissals for reasons connected with pregnancy and family friendly leave, dismissals for asserting a statutory right, dismissals for health and safety reasons, and dismissals for trade union membership or participation in trade union activities.

quotemarksPre-termination negotiatons will prevent what is stated in a settlement offer, or discussions about it, from being admissible in ordinary unfair dismissal proceedings.”

It is also worth noting that claims made on grounds other than unfair dismissal will not be covered. This means that pre-termination negotiations will be admissible where any subsequent claims are made for, for example, discrimination, harassment, victimisation, breach of contract or wrongful dismissal.

Finally, if any “improper behaviour” has occurred, then anything said or done in pre-termination negotiations will be inadmissible as evidence in tribunal claims only to the extent that the tribunal considers it “just”.

Employment tribunals have a wide discretion to decide what constitutes “improper behaviour” and to what extent any negotiations tainted by such behaviour will be admissible in tribunal proceedings. It remains to be seen how this discretion will be exercised.

Proceed with caution

While pre-termination negotiations may be an attractive tool for employers, they do have limitations. It is clear from the Acas code that the negotiations must be free from “improper behaviour” and there is a risk that behaviour during the course of the discussions could itself form the basis of a claim.

For instance, talking to an employee about retirement might involve the potential for the employee to bring an age discrimination claim. Similarly, a conversation with a woman currently on maternity leave suggesting that she should not return to work would potentially be discriminatory on grounds of sex.

Where there is an existing employment dispute, employers will still be able to rely on the “without prejudice” rule to keep settlement discussions confidential. However, where there are straightforward dismissal situations – for example, cases of poor performance or persistent misconduct where no dispute yet exists – it may be simpler and quicker for employers to rely on pre-termination negotiations to manage employees out.

Emma Burrows is head of employment at law firm Trowers & Hamlins.

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