Section 111A does not provide details on what constitutes “inappropriate conduct” and the Code states that it is for the court to decide based on the facts and circumstances of each case. However, under the Code, the following would constitute inappropriate behaviour: it is quite common for parties to correspond both without prejudice and on an open basis at the same time. For example, there may be simultaneously open letters on a proposed dismissal and negotiations on an agreed settlement. In these circumstances, it is important to mark the correspondence accordingly. A party could first agree that certain communications are without prejudice, but claim that correspondence during the trial has passed to an open basis. Clearly marking the correspondence as intact will help demonstrate the intentions of the parties at that time. Discussions held during an NWP may remain confidential even if there is no ongoing labour dispute or if one or more of the parties are unaware that there is an employment problem. This provides more certainty than the unbiased rule that settlement offers and conversations can and cannot be used as evidence. An employer may also want an employee to agree not to contact their customers for a period of time or to debauch their employees. These terms are called restrictive covenants. Whether an employee should accept new restrictions depends on the agreement as a whole and the future plans they may already have. Employees may be more likely to claim that they have been bullied or to argue that the reason for the discussion of the settlement is due to unlawful discrimination – such allegations could lead the Labour Court to decide that the discussions should be referenced in court proceedings because they were “inappropriate”.
If a party adopts this position, the Labour Court must hold additional and separate hearings to consider the point that will inevitably lead to increased costs and time management for both parties. Often, an employer uses a settlement agreement in which they are dismissing and have decided to pay more than the minimum amount of severance pay they are legally required to pay (see dismissal). If, unexpectedly, an employer offers an employee a settlement agreement to terminate the employment relationship and the employee was not previously aware of employment issues, it is unlikely that there was a dispute between the parties at the time the bid was submitted. In this case, the harm rule is unlikely to apply, although it can be protected as an NWP instead (see below). The name change has also led to new provisions under which settlement offers and discussions about terminating an employment contract cannot generally be used as evidence in future dismissal protection proceedings. While these provisions are designed to protect employers, there may be hidden dangers. This article discusses the potential benefits and pitfalls of entering into discussions about a settlement agreement with an employee. You can also find our FAQ on settlement agreements, which you can find here. For it to be a valid settlement agreement, the contract must be in writing, it must relate to a specific procedure (i.e., the types of claims that the individual employee can make), and it must also include a statement that legal requirements have been met. This provision is similar to the rule that discussions that would otherwise not be affected lose this protection if there is a so-called “clear insufficiency”. For example, perjury, extortion or any other “manifest abuse of a privileged opportunity” does not benefit from the harm rule. While the exact extent of “inappropriate behavior” is undoubtedly the subject of litigation, employers need to be careful about how they negotiate before termination to avoid losing the benefit of the (albeit limited) protection they will provide.
The draft ACAS Code of Practice on Settlement Agreements (the “Code”) described below contains comments and advice on what constitutes inappropriate behaviour. The code is likely to be in final form, but is awaiting government approval. However, if a settlement agreement contains all the legal requirements, even if the employer does not pay an employee as agreed, it will prevent an employee from asserting any of the claims listed in the agreement. Most labour rights – whether based on the employee`s employment contract or on certain laws that offer protection to employees – can be settled through a settlement agreement. .