Legal-ease: Protecting yourself during exit talks


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Protect your position when negotiating exits

Two recent decisions emphasise the importance of protecting your position while negotiating exits. Don’t open yourself up to significant costs by assuming that an agreement will be reached.

In Gibbs v Leeds United, assistant manager Nigel Gibbs expected to be sacked to make way for a new management team. However, Leeds approached him about becoming head coach. Gibbs said that he was not interested and told Leeds that there was a “deal to be done” regarding his exit.

Negotiations followed, but the parties were unable to agree terms. The relationship between Gibbs and the new head coach was strained, and Gibbs was removed from contact with the first team. Gibbs resigned and brought proceedings for constructive dismissal. Leeds argued that Gibbs wanted to go, but the Court found that this was irrelevant. It held that he was willing to perform his contract in the event a deal was not reached, and that Leeds had constructively dismissed him by showing intent not to perform the original contract.

In Fairthorn Farrell Timms v Bailey, without prejudice negotiations about an exit were held, but the employee later resigned, claiming constructive dismissal and sex discrimination. She referred to the negotiations in her ET1. The employer responded in their ET3 but at a later stage tried to argue that the discussions were privileged and/or inadmissible under the protected conversation rules in section 111A Employment Rights Act 1996. The EAT held that the parties’ conduct in referring openly to the discussions in their pleadings, amounted to a waiver under the without prejudice rules and the employee could rely on

the discussions in her sex discrimination claim. However, the court confirmed that there is no ability under section 111A to waive the protection offered by the legislation and so the discussions were not admissible in relation to the constructive dismissal claim.

Make sure you:

1. Are aware of the potential claims an employee could bring – a protected conversation will only offer protection in relation to ordinary unfair dismissal claims. Any other claims, such as discrimination, will not be covered, and the conversations could be referred to in evidence.

2. Only hold without prejudice discussions if there is a dispute and the discussions are a genuine attempt to settle, otherwise the protection will not apply.

3. Ensure all behaviour post-discussion is consistent with the fact no settlement has yet been agreed. No action should be taken which could be regarded by the employee as a breach of contract, entitling them to resign and claim constructive dismissal.

4. Don’t refer to the content of without prejudice discussions in open letters or tribunal pleadings. If the employee includes references, object immediately to the inclusion.

Lucy Gordon is senior solicitor at ESP Law. ESP Law provides HR magazine’s HR Legal Service

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