Was the employer’s behaviour ‘improper’ during pre-termination negotiations?

In this case, the Employment Appeal Tribunal (EAT) considered whether the employer’s behaviour met the threshold of being ‘improper’ during pre-termination negotiations, meaning that evidence of the negotiations would be admissible in subsequent tribunal proceedings. 

Gallagher v McKinnon’s Auto and Tyres Ltd [2024] EAT 174 

Facts of the case 

The employee, G, took a period of sick leave during which time the employer decided that it no longer needed someone to perform G’s role as branch manager. At a meeting called ostensibly to discuss his return to work following his absence, G was offered the option of taking an enhanced redundancy package.  

In G’s subsequent claim for unfair dismissal, a tribunal found this meeting to have been a ‘pre-termination negotiation’ within the statutory provisions of section 111A Employment Rights Act 1996. G claimed that the employer’s actions during the meeting were ‘improper’ and that he had been subject to ‘undue pressure’ to accept the offer, which was contrary to the Acas Code of Practice on Settlement Agreements. Specifically, he was told that a redundancy process would commence if he rejected the offer, and he was given only 48 hours in which to decide whether to accept it. He also claimed that it was ‘improper’ for the employer to invite him to a meeting to discuss his return to work, but instead use it to put forward the settlement offer.  

The tribunal rejected G’s arguments that the ‘impropriety exception’ applied, which meant that evidence of the meeting could not be used to support his claim for unfair dismissal. G appealed to the EAT, on the basis that the tribunal was perverse in concluding that there had been no impropriety in the employer’s behaviour. 

EAT decision 

The EAT has rejected G’s appeal, upholding the tribunal’s conclusion that there had not been improper behaviour by the employer in this case.  

The EAT was satisfied that the tribunal had considered the requirements of the Acas Code in reaching its decision. The employer had not threatened G with dismissal if the enhanced package was rejected; it had stated only that a redundancy process would be commenced. In addition, the 48-hour deadline to accept the offer was only to indicate acceptance of the verbal offer, following which he would have the opportunity to consider the proposed written terms of settlement. On the facts of this case, it was open to the tribunal to conclude that 48 hours was sufficient.   

The EAT considered that while it may not have been fair for the employer to use a meeting about G’s return to work as a pretext for raising the possibility of termination, the tribunal’s conclusion that it did not constitute impropriety was permissible in the circumstances taking into account how the meeting was conducted overall. 

The Birketts view 

There has been relatively little case law on what constitutes ‘improper behaviour’ on the part of an employer, resulting in evidence of pre-termination negotiations being admissible in subsequent tribunal proceedings. This decision is therefore helpful in terms of framing what might be regarded as acceptable conduct of settlement discussions with an employee who is unlikely to be anticipating them. 

Employers should bear in mind, however, that in this case it appears there was no related claim of unlawful discrimination. The statutory provisions only mean that evidence of pre-termination negotiations is inadmissible in claims of ordinary unfair dismissal; evidence may still be admissible in claims for automatic unfair dismissal (for example, relating to trade union activities, health and safety or whistleblowing) and/or discrimination claims. For this reason, employers should still approach such conversations with caution, and ensure they follow the requirements of the Code of Practice. This provides that employees should generally have a minimum of 10 days to consider the written terms of any settlement offer and seek independent legal advice.