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This is a guest blog about pre-termination negotiations or PTNs by Blair Adams, an employment lawyer at law firm DMH Stallard.

In July 2013, new legislation introduced the concept of pre-termination negotiations (PTNs). PTNs are confidential and will not be admissible in certain tribunal proceedings, the intention being to make it easier for employers to have off-the-record conversations with employees about agreed terminations. In addition, conducting a PTN and concluding a settlement agreement are now the subject of a new ACAS Code on Settlement Agreements. The Code is not legally binding, but it will be taken into account by tribunals.

What is a PTN?

It is simply a discussion about terminating employment on agreed terms. There are no particular formalities required under the legislation, but it would be prudent to establish with the employee at the beginning that you are starting a discussion or sending them a letter on the basis that it falls with the scope of a PTN.

What is the benefit?

It is an opportunity to try to agree terms with an employee before taking any formal steps, such as a performance management review or a disciplinary procedure. In contrast to the existing “without prejudice” rule, a PTN does not require there to be a pre-existing dispute.

What are the risks?

• loss of confidentiality;
• constructive dismissal claims – nothing in the legislation prevents an employee claiming constructive dismissal if you suggest that they should leave. In some cases, employees could use this to “manufacture” a wrongful dismissal that allows them to escape contractual restrictions.

How far does the confidentiality go?

• the confidentiality only applies in claims of ordinary unfair dismissal. Evidence of what happened in a PTN could still be admissible in other claims, such as discrimination or automatic unfair dismissal;
• all confidentiality is lost if one party is found to have behaved improperly in the course of a PTN;
• the confidentiality relates to employment tribunal proceedings – nothing in the legislation prevents an employee telling a third party about a PTN; and
• it can be removed in relation to costs applications in the tribunal – but a party needs to reserve its position on this at the time of the PTN.

Improper behaviour

This is defined in the Code. It is ultimately for a tribunal to decide what amounts to improper behaviour, but the Code provides examples. These include the obvious (physical assault, harassment, victimisation and discrimination, bullying and intimidation) and the concept of “undue pressure”.

Undue pressure

According to the Code, undue pressure includes:
• failing to allow a reasonable time for consideration of a settlement agreement (the Code suggests 10 calendar days is the minimum period);
• saying that if a settlement is not reached the employee will be dismissed (although the Code says it will not be improper to set out in neutral terms the “likely alternatives” to settlement); and
• an employee threatening to damage an employer’s public reputation if a settlement is not reached.

Concepts such as intimidation and undue pressure are ill-defined – expect disputes about them in the near future. For example:

• would a statement by the employer that the employee will get a less favourable reference unless terms are agreed amount to improper behaviour?
• could an employee claim to have been unduly pressured if you ask them to respond to a settlement agreement within fewer than 10 days?

Companions

The Code suggests that the right to be accompanied should apply during a PTN, although this is not a legal requirement and so the employee cannot insist on it. Many employers will want to ignore the suggestion, the risk being that they will be found to have behaved improperly.

Without prejudice confidentiality
PTNs may also fall within the scope of the existing without prejudice rule. In most cases, employers will want to use both labels if they can.

On 29 July, compromise agreements were officially renamed “settlement agreements”.

To contact Blair Adams, employment lawyer, the guest blogger, click on this link:

http://www.dmhstallard.com/site/people/profile/blair.adams@dmhstallard.com

Thinking of changing jobs or know someone who is?

At a career crossroads, whether changing jobs or becoming self-employed, it is important to make a robust decision, having thought about all the implications of your planned change. These implications need to include legal ones which affect your rights and choices.

This is a guest blog, part 1 of 2, by Michael Scutt who is an employment lawyer. It explores the employment law implications of changing jobs, specifically your notice period.

Changing your job can feel a risky and anxious experience. There may be many reasons why you are changing your job; dissatisfaction at a lack of prospects, wanting more pay or responsibility, feeling undervalued or simply relishing a new challenge. However, for some, there can be truth in the old adage of “better the devil you know”. For the more risk averse, making the decision to leave voluntarily can therefore be a daunting step.

In many situations, the decision to change jobs can be forced upon an employee by redundancy or dismissal, but whatever the reason for departure from one job, it is never an easy step psychologically.

So what are the legal issues you need to think about before ‘jumping ship’?

Your notice period
The first step is to look at your contract of employment. How much notice do you have to give before you can leave? In many cases, and it depends on your seniority in the business you are leaving, your notice period may be no more than one month or, depending on length of service, one week per year of service up to a maximum of 12 weeks (being the statutory notice due). In other cases, particularly with more senior employees, the period of notice you are required to give maybe three or even six months. Only very senior employees might be required to give 12 months notice.

In the absence of anything in writing, the statutory provisions will prevail being such period as is ‘reasonable’ in all the circumstances. You should not work for a new employer until your notice period has expired. Again, a look at your employment contract will tell you whether your employer can pay you in lieu of notice (called a ‘PILON clause’), meaning they can pay you the money you would have received during your notice period (had you served it) in a lump sum. If there is no PILON clause in your contract, your employer may be able to pay you the value of the notice period gross of tax and National Insurance contributions.

However, if you are the one who instigated the move, it is unlikely that your employer will wish you to leave so quickly, particularly if there is any risk that you might take their clients or customers with you to your next job. On the other hand, if the employer is terminating your employment, perhaps for reason of redundancy, they may be prepared to pay you in lieu of notice. If the departure is likely to be amicable, then it can be worth speaking to your employer to negotiate the timing of your exit.

When considering changing jobs, it is worth checking your existing contract of employment and, if necessary, take advice from an employment lawyer. At the same time you could also take advice on the terms of the new contract you are being asked to enter into so that you are forewarned for any future issues that may arise when you finally move on from that employment.

Visit this blog again in two weeks for part 2 which explores garden leave, restrictive covenants and discretionary bonuses.

Michael Scutt is an employment solicitor with Excello Law. (http://www.excellolaw.co.uk/solicitors/michael-scutt/) He can be contacted via mscutt@excellolaw.co.uk or (01707) 471030 or 0845 257 9449. Follow Michael on Twitter https://twitter.com/michaelscutt

How to conduct a pre-termination negotiation

What are the legal implications of job change?