As identified in our recent bulletin, the Enterprise and Regulatory Reform Bill was expected to introduce a number of reforms in relation to compromise agreements.
The original bill presented before Parliament simply renamed compromise agreements as ‘settlement agreements’, however, it was explained at the time that further amendments would be introduced at a later date.
These amendments were tabled yesterday and concern the concept of ‘protected conversations’. It is intended that a new section will be added to the Employment Rights Act 1996, which will result in employees being unable to make reference during the course of Employment Tribunal proceedings to some offers or discussions with employers that take place prior to the termination of their employment.
The suggested amendments have identified that a number of exclusions will apply and ‘protected conversations’ will only occur in very limited circumstances:-
1) The concept will only apply to unfair dismissal claims. Claims such as discrimination or breach of contract will not be affected by the amendments and employees will be able to refer to the conversations;
2) Nor will the protection apply to automatically unfair dismissals, such as terminations that take place as a result of whistleblowing or pregnancy; and
3) Conversations will not be protected when the behaviour of the employer is considered to have been ‘improper’.
The Enterprise and Regulatory Reform Bill is to be considered by Parliamentary committee all this week.
KBL comment: It is highly likely that the introduction of protected conversations will result in significant litigation about the interpretation of ‘improper’ behaviour. This will mean that the Tribunal will have to hear evidence about the conversation in order to consider whether or not the behaviour has been improper. Further, the exclusions outlined in the draft bill may ultimately result in satellite litigation debating whether a conversation is actually ‘protected’. This may defeat the object of encouraging parties to reach a settlement prior to instigating Tribunal proceedings. As a result, we would recommend that, following the introduction of the bill, legal advice is still sought prior to approaching an employee in order to minimise the risk that ‘protected conversations’ will actually be ‘open’.