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07 February 2018

Evidence of pre-termination negotiations is admissible where the termination date is in dispute

Under the Employment Rights Act 1996 (ERA 1996), evidence of pre-termination negotiations between an employer and an employee is generally inadmissible in unfair dismissal proceedings (section 111A). In Basra v BJSS Ltd, the Employment Appeal Tribunal (EAT) has confirmed that this provision will not apply where the effective date of termination of employment (EDT) is in dispute.

Mr Basra was employed by BJSS Ltd as a technical architect. Following a meeting to discuss various complaints from clients concerning Mr Basra’s performance, on 1 March 2016 BJSS sent him two letters: an open letter inviting him to a disciplinary hearing; and a letter marked ‘without prejudice subject to contract’, offering him three months’ salary in return for immediate termination under a settlement agreement. On 3 March, Mr Basra responded by email to the second letter, accepting the company’s offer ‘subject to contract and without prejudice’ and stating ‘today will be the last day at BJSS’. The company was then informed by Mr Basra’s solicitors that he had been signed off with stress and would not attend the disciplinary hearing. On 15 March, BJSS wrote to Mr Basra stating that his employment had terminated by agreement on 3 March. No settlement agreement was signed and Mr Basra subsequently commenced unfair dismissal proceedings in which both the EDT and the manner of termination were disputed.

BJSS contended that Mr Basra’s employment had terminated by mutual agreement on 3 March, relying on its without prejudice offer and his acceptance by email; whereas Mr Basra argued that he was dismissed by BJSS on 15 March. The Employment Tribunal did not consider the company’s without prejudice offer on the basis that it formed part of the pre-termination negotiations and was therefore excluded from evidence under section 111A ERA 1996. However, Mr Basra’s acceptance email of 3 March was considered in evidence because, in the Tribunal’s view, the scope of section 111A ended once he had agreed to terminate his employment on the terms proposed. The Tribunal concluded that the email amounted to a resignation and that since there was no dismissal, Mr Basra’s unfair dismissal claim failed.

On appeal, the EAT disagreed with the Tribunal’s approach. Given that the protection under section 111A ERA applies to pre-termination negotiations, it follows that the EDT must be determined first. Since the EDT was disputed in this case, the EAT concluded that the Tribunal was wrong to exclude evidence of negotiations before 3 March because they were relevant to determining the EDT. The EAT also held that the Tribunal was wrong to find that the acceptance email, without reference to the without prejudice offer, amounted to an unambiguous resignation. For example, if the correct EDT was 15 March then the acceptance email itself might be inadmissible. The case was remitted to the Employment Tribunal to establish the EDT as a preliminary point before considering the remaining issues.

This case confirms that under section 111A ERA, evidence of negotiations becomes admissible at the date the contract is terminated. It follows that, where there is a dispute as to the EDT, it is not possible to say what evidence should be excluded until that dispute is settled. Any communications with employees about termination of employment must be carefully and unambiguously worded in order to avoid any unnecessary dispute, particularly in relation to the EDT. Employers should also make a clear distinction between open discussions and correspondence which they may wish to rely on in Tribunal proceedings, and without prejudice or protected discussions which will not generally be admissible.

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