Protected conversations are a useful tool for employers embarking on a redundancy process, but it is important to address the potential downsides they may encounter along the way. Henry Cross delves into the pros and cons of protected conversations and without-prejudice dialogue in redundancies.
Navigating the complex process of redundancy can be daunting for employers. There is a balancing act. HR professionals want to keep relationships with employees positive, but they also need to protect their organisation’s interests.
Redundancies are prevalent in the current economic climate. In the technology sector, companies such as Meta and Amazon, have announced restructures in the face of technological advances, changing market demands and unforeseen disruptions.
Against this backdrop, protected conversations, coupled with off-the-record processes and settlement agreements, have become a popular as a way of streamlining restructures.
Protected conversations in UK employment law
A protected conversation is a confidential dialogue, often used by employers to discuss an employee’s exit. Neither party can use the content of the conversation as evidence in future legal proceedings.
Protected conversations are designed to encourage open and honest communications. In theory, they allow both parties to discuss issues and solutions without worrying about potential litigation.
Settlement agreements
Settlement agreements cannot void future discrimination claims, EAT rules
However, the protection generally only applies to ordinary unfair dismissal claims. It does not extend to automatically unfair dismissal or whistleblowing claims.
Neither can it extend to discrimination claims under the Equality Act 2010, nor to situations where there has been so-called unambiguous impropriety, such as coercion.
If unsure, employers should seek legal advice before undertaking a protected conversation to ensure you benefit from the protected status.
‘Without-prejudice’ dialogue
Protected conversations and the without-prejudice rule both aim to allow open dialogue and settlement talks. The key difference is the without-prejudice rule specifically applies to existing disputes.
It has a well-established legal framework, recognised by tribunals and courts alike, and is often invoked and relied on in settlement negotiations. Protected conversations are a creation of specific legislation in the UK (section 111A Employment Rights Act 1996).
They are limited to employment-related discussions and apply to unfair dismissal claims only. Protected conversations do not require an existing dispute and in this sense, they provide a broader framework for confidential discussions.
A common approach is for employers to first initiate an “open” redundancy process. For example, confirming certain employees are “at risk” of redundancy. They will then hold a protected conversation before then embarking on settlement negotiations.
This allows employers to argue that the pre-termination negotiations are without prejudice, given that a pre-existing dispute exists, namely the impending redundancy. At the same time, the conversations are protected under legislation assuming one of the exceptions does not apply. This is why parties negotiating a settlement agreement will mark correspondence “without prejudice”.
Pros of protected conversations
Preserving confidentiality
Protected conversations and without-prejudice processes help to preserve confidentiality. Ordinary redundancy processes are subject to potential legal disputes and public scrutiny. Protected conversations provide a confidential space for employers to discuss a resolution to the process. It is important to remind employees throughout that the discussions remain strictly confidential. Settlement agreements should include confidentiality provisions and payments under the agreement can be contingent on the employee keeping confidentiality.
Promoting effective communication
Protected conversations can help employers establish an open and productive line of communication. This approach allows both parties to express their concerns, expectations, and potential solutions. This can foster an environment of collaboration rather than confrontation. Through encouraging dialogue, employers can minimise emotional impact and ensure a smoother transition.
Navigating legal complexity
Employers often find themselves grappling with the intricate web of employment law when considering redundancies. Engaging in a protected conversation accompanied by a settlement agreement can help employers navigate this legal complexity effectively. With the assistance of legal advice, employers can structure a settlement package that adheres to legal requirements while also safeguarding their interests. This ensures a legally sound and robust process, lessening the risk of costly legal battles down the line.
Tailored solutions and cost savings
In ordinary redundancies, employers are bound by statutory rules and case law, limiting flexibility. The protected conversation approach opens the door to negotiation and flexibility. By using settlement agreements, employers can create bespoke packages. This allows them to take into account various factors ignored or limited under the statutory regime. These include length of service, loyalty, future references, confidentiality and restrictive covenants. This can save time and resources, and protect against reputational damage.
Safeguarding company reputation
Protected conversations are transparent yet closed. They can allow employers to handle redundancies discreetly. This can help protect an organisation’s reputation and minimise any negative impact on employee morale. In conducting such a process, an employer can offer a supportive environment and a fair settlement agreement, helping the parties to part ways amicably. In turn, this can enhance an employer’s reputation as a considerate employer.
Cons of protected conversations
Limiting statutory protection
Employees may benefit financially from an agreed exit but are, of course, signing away their legal rights. Employees might also benefit from the “clean break” this provides, yet might feel like they are not prepared to part with legal protections. This can result in dissatisfaction among employees who feel their rights have not been fully recognised or respected.
Potential breach of equality laws
Employers should tread carefully during protected conversations. A slight misstep could lead to an inadvertent breach of equality law. These conversations can touch sensitive topics, such as age, gender or disability, leading to claims of discrimination which are not protected as discussed above. Employers must maintain fairness and adhere to equality laws throughout the process, otherwise they risk legal complications and reputational damage. A without-prejudice dialogue however will remain non-disclosable in the context of discrimination litigation as well as unfair dismissal claims.
Uncertain employee response
The aim of protected conversations and without-prejudice discussions may be to foster open communication, however, employees may respond negatively or feel pressured during discussions. There are occasions when employees can perceive them as coercive or manipulative. Employers need to be sensitive to the emotional impact on employees and provide appropriate support. For example, referral to an Employee Assistance Programme might be sensible to ensure employees can seek help if needed.
Costs and time
Engaging in protected conversations, without-prejudice processes and settlement agreements can require a significant investment of time and resources and, of course, are not always effective. Employers may need to seek legal advice, conduct negotiations, and draft complex settlement agreements. They will invariably need to offer more than the legal minimum of a statutory redundancy payment and contractual entitlements (including notice pay and any accrued holiday pay). Employers will also need to pay for employees to obtain independent legal advice on the terms and effect of the settlement agreement. This has the potential to create a more confrontational approach since the independent legal advisor might, for example, advise the employee to dig their heels in and seek more money. This can all result in increased costs, including the employer’s own legal fees, as well as a prolonged redundancy process. Organisations must weigh these considerations against the potential benefits when deciding on the most suitable approach.
Employers must strike a balance between the advantages and disadvantages of the off-the-record process presented by protected conversations in redundancy situations. By being mindful of the potential downsides and addressing them proactively, employers can ensure a fair, transparent, and legally compliant process, while also fostering positive employee relations and safeguarding their own interests.
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