- Introduction
- What Is a Protected Conversation?
- Why Were Protected Conversations Introduced?
- What Does Section 111A Employment Rights Act 1996 Say?
- What Does Section 111A Protect?
- The Limits of Section 111A: What It Does NOT Protect
- Can Protection Under Section 111A Be Waived?
- Can an Employee Rely on a Protected Conversation at Tribunal?
- Protected Conversations vs Without Prejudice: Key Differences
- Practical Guidance for Employers and HR Professionals
- Conclusion
Introduction
When an employer wants to have a frank conversation with an employee about bringing their employment to an end — on agreed terms, usually by way of a settlement agreement — doing so without legal risk is not always straightforward. Say the wrong thing, and that conversation could be used against the employer in an employment tribunal.
Section 111A of the Employment Rights Act 1996 was introduced to address precisely this problem. It created the concept of the pre-termination negotiation, widely known as a protected conversation, and gave employers and employees a statutory framework within which such discussions could take place on a confidential basis.
This guide explains what Section 111A says, what it protects, where its limits lie, and what the leading case law tells us about how the courts will interpret it.
What Is a Protected Conversation?
A protected conversation — properly called a pre-termination negotiation — is a discussion or written communication made before the termination of employment, with a view to the employment ending on agreed terms, typically under a settlement agreement.
The term “protected” refers to the fact that what is said or written during such a negotiation is, in defined circumstances, inadmissible in employment tribunal proceedings. The protection is designed to encourage open, honest dialogue between employers and employees about potential exits, without either party fearing that their words will later be used against them.
Protected conversations were introduced by the Enterprise and Regulatory Reform Act 2013, which inserted Section 111A into the Employment Rights Act 1996. They came into force in July 2013.
Why Were Protected Conversations Introduced?
Before protected conversations existed, employers who wanted to have a sensitive conversation about ending someone’s employment had to rely on the without prejudice rule — a common law principle which prevents communications made in a genuine attempt to settle a dispute from being used in legal proceedings.
The without prejudice rule has a significant limitation: it only applies where there is an existing dispute between the parties. This created a practical problem. An employer who wanted to initiate a settlement conversation — before any formal dispute had arisen — could not always be confident that the without prejudice protection would apply. The risk of saying something that could be disclosed in later tribunal proceedings made many employers reluctant to have those conversations at all.
Section 111A was intended to resolve this. It provides a statutory basis for protecting pre-termination negotiations, removing the requirement for a pre-existing dispute and giving employers greater certainty about when protection will apply.
What Does Section 111A Employment Rights Act 1996 Say?
The full text of Section 111A is as follows:
111A — Confidentiality of negotiations before termination of employment
(1) Evidence of pre-termination negotiations is inadmissible in any proceedings on a complaint under section 111. This is subject to subsections (3) to (5).
(2) In subsection (1) “pre-termination negotiations” means any offer made or discussions held, before the termination of the employment in question, with a view to it being terminated on terms agreed between the employer and the employee.
(3) Subsection (1) does not apply where, according to the complainant’s case, the circumstances are such that a provision (whenever made) contained in, or made under, this or any other Act requires the complainant to be regarded for the purposes of this Part as unfairly dismissed.
(4) In relation to anything said or done which in the tribunal’s opinion was improper, or was connected with improper behaviour, subsection (1) applies only to the extent that the tribunal considers just.
(5) Subsection (1) does not affect the admissibility, on any question as to costs or expenses, of evidence relating to an offer made on the basis that the right to refer to it on any such question is reserved.
What Does Section 111A Protect?
The Content of the Negotiation
The most obvious protection afforded by Section 111A is that the content of a pre-termination negotiation — the offer made, the terms discussed, the figures proposed — is inadmissible in an ordinary unfair dismissal claim brought under Section 111 of the Employment Rights Act 1996.
The Fact That a Conversation Took Place
Importantly, Section 111A goes further than protecting only what was said. The Employment Appeal Tribunal has confirmed that the fact that a protected conversation took place at all is also inadmissible. An employee cannot tell a tribunal that a protected conversation occurred, even if they do not disclose its content.
This has significant practical implications. It means an employee cannot use the mere existence of a settlement approach as evidence of an employer’s intention to dismiss, or as part of a narrative supporting a constructive dismissal claim or argument the dismissal was pre-determined.
Internal Communications
The protection extends beyond the room in which the conversation takes place. Internal discussions between managers, HR professionals, and senior leadership about a protected conversation may also be inadmissible, provided they relate to the subject matter of the pre-termination negotiation.
This point was addressed directly by Her Honour Judge Eady QC in the leading Employment Appeal Tribunal case of Faithorn Farrell Timms LLP v Bailey, at paragraph 43 of the judgment:
“It will be fairly commonplace for a manager to have to report back to a Board, higher management or HR on any such discussions; it would run counter to the purpose of section 111A if evidence of those reports was ruled to be admissible. Taking the wording of section 111A as the touchstone, the focus has to be on the subject matter of the evidence in question. If it is properly to be characterised as evidence of an offer or discussions held for the required purpose then (unless rendered admissible by any of the exemptions) it is inadmissible in any claim of unfair dismissal.”
HHJ Eady QC — Faithorn Farrell Timms LLP v Bailey [EAT], para. 43
This is a particularly important point for HR professionals and managers to understand. Communications that might otherwise appear to be routine internal emails or notes — if they concern a pre-termination negotiation — are likely to fall within the scope of Section 111A protection.
The Limits of Section 111A: What It Does NOT Protect
Section 111A is a powerful but narrow protection. Employers and employees should be clear about what it does not cover.
It Only Applies to General Unfair Dismissal Claims
Section 111A protects against admissibility only in relation to a complaint under Section 111 of the ERA — that is, a general unfair dismissal claim. It does not apply to:
- Automatic unfair dismissal claims — for example, where a dismissal is alleged to be connected to whistleblowing, trade union activities, pregnancy, or other automatically unfair reasons
- Discrimination claims — under the Equality Act 2010
- Breach of contract claims
- Wrongful dismissal claims
This means that if an employee brings a claim that falls outside the narrow category of general unfair dismissal — or combines a general unfair dismissal claim with a discrimination claim — the content of a protected conversation may be admissible in relation to those other heads of claim, even if it remains inadmissible for the unfair dismissal element.
This is a critical distinction. An employer who has a protected conversation believing everything said is confidential may be surprised to find that the same conversation is admissible in the employee’s parallel discrimination claim.
Improper Behaviour Removes Protection
Section 111A(4) provides that where anything said or done during a pre-termination negotiation was improper, or connected with improper behaviour, the tribunal may treat the evidence as admissible to the extent it considers just.
ACAS has published a Code of Practice on Settlement Agreements which gives guidance on what may constitute improper behaviour. Examples include:
- Placing undue pressure on an employee to accept an offer
- Threatening dismissal if a settlement offer is not accepted
- Giving an employee an unreasonably short period of time to consider an offer (less than ten days may be considered improper)
- Misrepresenting the strength of a disciplinary case against an employee
The improper behaviour exception ensures that Section 111A cannot be used as a shield by employers who act oppressively during settlement discussions.
Can Protection Under Section 111A Be Waived?
This is one of the most significant questions to have been considered by the Employment Appeal Tribunal in the context of Section 111A, and the answer is clear: no.
The Without Prejudice Rule Compared
Under the common law without prejudice rule, privilege can be waived. If both parties agree, a without prejudice communication can be placed before a court or tribunal. This reflects the underlying principle that the protection exists for the benefit of both parties and can therefore be surrendered by them jointly.
One might expect the same to apply to Section 111A. It does not.
Bailey v Faithorn Farrell Timms LLP
The leading case is Faithorn Farrell Timms LLP v Bailey [EAT], the Employment Appeal Tribunal’s first substantive decision on Section 111A.
Mrs Bailey brought claims of constructive unfair dismissal and indirect sex discrimination. Some of her complaints arose from the manner in which her employer had conducted settlement discussions. She sought to rely on those discussions — both their content and the fact that they had taken place — in support of her claims.
At first instance, the employment tribunal held that the settlement discussions were partly inadmissible under Section 111A and partly under the without prejudice rule. On the Section 111A issue, it initially suggested that only the content of the offer — not the fact that discussions had taken place — was inadmissible.
The employer appealed. The Employment Appeal Tribunal held that:
- Neither the details nor the existence of pre-termination negotiations can be relied upon by a claimant in support of an unfair dismissal claim under Section 111A;
- There is no statutory provision permitting waiver of Section 111A protection, unlike the position under the common law without prejudice rule; and
- The protection under Section 111A and the without prejudice rule operate independently of one another and should be analysed separately.
The practical consequence is significant. Even if an employer is content for the content of a protected conversation to be disclosed — perhaps because it considers this advantageous to its case — it cannot unilaterally waive the statutory protection. The protection is fixed by statute, not by the parties’ agreement.
Can an Employee Rely on a Protected Conversation at Tribunal?
Following Bailey v Faithorn Farrell Timms LLP, the position for employees is equally clear.
An employee cannot rely on either the content or the existence of a pre-termination negotiation in support of a general unfair dismissal claim. This applies even where the employee considers that the employer behaved improperly during the negotiation — though in that scenario, the improper behaviour exception under Section 111A(4) may apply and the tribunal has a discretion to admit the evidence.
Where the employee’s claim includes heads of claim beyond general unfair dismissal — such as discrimination or automatic unfair dismissal — the protected conversation may be admissible in relation to those claims, and the employee may be able to rely on it for those purposes even where it remains inadmissible for the unfair dismissal element.
This creates a complex evidential picture in mixed claims, and is one reason why both employers and employees are well advised to take specialist legal advice before entering into, or responding to, a protected conversation.
Protected Conversations vs Without Prejudice: Key Differences
Although both Section 111A and the without prejudice rule serve a similar purpose — encouraging frank settlement discussions by limiting admissibility — they operate differently and should not be confused.
| Feature | Section 111A / Protected Conversation | Without Prejudice Rule |
|---|---|---|
| Legal basis | Statutory (ERA 1996) | Common law |
| Pre-existing dispute required? | No | Yes |
| Scope of inadmissibility | General unfair dismissal only | All civil proceedings (subject to exceptions) |
| Can privilege be waived? | No | Yes, by agreement of both parties |
| Improper behaviour exception? | Yes (s.111A(4)) | Yes (similar common law exception) |
In practice, a settlement conversation may be protected by both Section 111A and the without prejudice rule simultaneously, particularly where a dispute already exists. The two protections should be analysed separately when questions of admissibility arise.
Practical Guidance for Employers and HR Professionals
The following points summarise the key practical considerations when conducting or preparing for a protected conversation.
Before the Conversation
- Consider whether Section 111A, the without prejudice rule, or both apply to your situation
- Familiarise yourself with the ACAS Code of Practice on Settlement Agreements
- Avoid any suggestion that dismissal is inevitable if the employee does not accept the offer
- Ensure the employee is given adequate time to consider any offer — a minimum of ten days is advisable
During the Conversation
- Conduct the discussion respectfully and without pressure
- Do not misrepresent the strength of any disciplinary case or other proceedings
- Keep a careful record of what is said, but be aware that internal notes about the conversation will themselves be protected under Section 111A
After the Conversation
- Remember that the fact of the conversation, not just its content, is inadmissible in a general unfair dismissal claim
- Be aware that any discrimination or automatic unfair dismissal claims brought by the employee may allow the conversation to be introduced in evidence
- Seek legal advice if the employee raises allegations of improper conduct
Conclusion
Section 111A of the Employment Rights Act 1996 provides a valuable but carefully defined protection for pre-termination negotiations. It enables employers and employees to have frank conversations about settlement without fear that those discussions will be used in a general unfair dismissal claim — but it does not offer blanket protection across all types of claim, and it cannot be waived.
The decision in Bailey v Faithorn Farrell Timms LLP confirmed that the protection is broader than many initially assumed — covering not just the content of negotiations but their very existence, and extending to internal communications about those negotiations. It also confirmed that the protection is fixed by statute and cannot be surrendered by the parties.
For anyone considering a protected conversation — whether as an employer, an HR professional, or an employee — understanding the precise scope and limits of Section 111A is essential. The consequences of getting it wrong can be significant.
The contents of this page are for general guidance only and do not constitute legal advice. If you require advice on a specific situation, please consult a qualified employment law solicitor.
