Your sales manager has been performing poorly recently and you have decided that it is probably time for you and he to part company. You have not discussed this with him and you do not want to have to go through your performance improvement procedure. You are prepared to pay him off, and you call him in to discuss matters. Sound familiar? If so, beware: you could land yourself in a lot of trouble if you try to short-circuit matters by having such a discussion.
Constructive unfair dismissal:
Billington v Michael Hunter & Sons
The first trap into which the unwary employer can fall is a claim of constructive unfair dismissal. If an employer threatens to dismiss an employee if the employee does not resign then, unless the employer can establish that it had good grounds for acting in this way, it will be in breach of the duty to maintain trust and confidence and the employee will be able to resign and claim constructive unfair dismissal.
In the recent case of Billington v Michael Hunter & Sons Ltd EAT/0578/03/D, an employee who had been given a disciplinary warning was subsequently summoned to another meeting to review her performance. The employer said that, if there were any further incidents of misconduct or poor performance, she would be dismissed. The employer pointed out that it would not be in her interests to have a dismissal on her CV and offered her the opportunity to resign on favourable terms. The employee subsequently resigned and brought a claim of constructive unfair dismissal in the employment tribunal. The Employment Appeal Tribunal (EAT) upheld the employee's appeal and found that, in the circumstances, the suggestion that the employee resign was clearly a 'vote of no confidence' in the employee.
In light of the Billington case, employers should think carefully before seeking to short-circuit their disciplinary or poor performance procedures by suggesting an employee resign, even if they are prepared to offer a financial incentive for the employee to leave.
The 'without prejudice' rule
Of course, in the Billington case the employer did not say the discussions were 'without prejudice'. Had it done so, it would have been in a better position because the general rule is that such discussions cannot be referred to openly. Where the 'without prejudice' rule applies, communications between parties are privileged and cannot be admitted in evide