In Gallagher v McKinnon's Auto and Tyres Limited [2024] EAT 174, the Employment Appeal Tribunal found that an employer had not behaved improperly during a "protected conversation" with its employee.
What are "protected conversations"?
A "protected conversation" is a conversation held in accordance with section 111A of the Employment Rights Act 1996. It permits an employee and employer to have inadmissible – that is, "off-the-record" – conversations about the employee's possible departure. Often, "protected conversations" take place where the employee is otherwise facing the prospect of a disciplinary, capability or redundancy process. As such, they allow both parties to sidestep the possible embarrassment, time and costs involved in such processes, and instead focus on agreeing terms of settlement. Further, unlike "without prejudice" communications, "protected conversations" can occur before a dispute arises, which allows the parties to explore termination of employment before relations sour.
However, there are limits:
- "Protected conversations" are only inadmissible in proceedings for "ordinary" unfair dismissal claims. A party would therefore not be able to exclude such conversations from evidence in a claim for discrimination, for instance; and
- A party should not expect a conversation to be "protected" if they have behaved improperly and/or put undue pressure on the other. According to the Acas Code of Practice on Settlement Agreements (the "Acas Code"), this may occur if one party is not given a reasonable period to consider terms of settlement (the Acas Code suggests a minimum of 10 days to consider the formal written terms); or where an employee is told that they will be dismissed if they reject the settlement proposal, even before any disciplinary process has begun.
What was Gallagher about?
Facts
Mr Gallagher had been employed for five years as a branch manager for McKinnon Auto and Tyres ("MAT"), when he went off sick for two months. During that time, the directors of MAT discovered that they no longer needed a branch manager. The directors therefore invited Mr Gallagher to a meeting – ostensibly to discuss his return to work. However, during that meeting, the directors instead told Mr Gallagher that they would be covering his role going forward, and presented him with a settlement offer of £10,000 which would see Mr Gallagher dismissed for redundancy. Mr Gallager was given 48 hours to consider it. The directors also told Mr Gallagher that, if he did not accept their offer, MAT would "go through a redundancy procedure".
Mr Gallagher declined the offer, was dismissed, and subsequently filed for unfair dismissal.
What was decided?
Mr Gallagher sought to refer to his meeting with MAT's directors as evidence that he was unfairly dismissed. MAT objected, arguing that it was inadmissible as a "protected conversation". The Employment Tribunal agreed with MAT.
Mr Gallagher appealed to the Employment Appeal Tribunal ("EAT"), arguing that it was perverse for the Employment Tribunal to have found that there was no impropriety and/or undue pressure during his meeting with MAT's directors, given:
- Mr Gallagher was told that he would be dismissed if he did not accept MAT's settlement offer;
- The meeting was set up under false pretences; and
- Mr Gallagher was given only 48 hours to respond to the settlement offer.
The EAT dismissed each ground of appeal:
- Though MAT's directors told Mr Gallagher that they would be covering his role going forward, this did not mean that Mr Gallagher was inevitably going to be dismissed if he rejected the settlement offer. Rather, it simply meant that Mr Gallagher's role was redundant and, if he chose to reject MAT's offer, it would then commence a redundancy process with him.
- MAT's directors had not deliberately misrepresented or lied about the purpose of the meeting. Though it may have been unfair to invite Mr Gallagher to a meeting under false pretences, that fell short of impropriety – especially given other factors which mitigated the degree of pressure experienced by Mr Gallagher. For instance, Mr Gallagher was swiftly provided with a breakdown of the settlement figure being offered; the meeting was conducted calmly; and Mr Gallagher had time to discuss matters with his family.
- There was no impropriety in giving Mr Gallagher just 48 hours to revert on the settlement offer. It was clear that those 48 hours related to the verbal offer communicated to Mr Gallager during the meeting, which was not unreasonable in the circumstances. Further, the reference in the Acas Code to a minimum of 10 days only applied once the written terms of a settlement agreement had been provided.
What are the implications for employers?
This case would appear to suggest something of a high bar before an Employment Tribunal will find impropriety and/or undue pressure during a "protected conversation". Though MAT's directors had already decided that Mr Gallagher's role was redundant, misrepresented the purpose of their meeting, and gave him just two days to consider their offer, this was found to be insufficient, even in aggregate, to render the conversation admissible in unfair dismissal proceedings.
It is also clear that Employment Tribunals will look at matters in the round. Indeed, it seems that MAT's relatively high-handed behaviour in some respects was mitigated by its more reasonable behaviour in others. Accordingly, employers may take heart from the fact that, should a "protected conversation" get off to a rocky start, it may be possible to salvage things by proceeding sensibly and compassionately from that point onward.
For further guidance on these and any other employment-related matters, please reach out to your usual Mishcon contact or a member of our Employment team.