In most cases employment relationships are constructive and mutually beneficial. However, sometimes an employer may decide that an employment relationship has deteriorated and/or is untenable e.g. attitude problems, loss of respect, interpersonal problems, staff conflict, poor performance, etc.
Where a breakdown in an employment relationship happens, sometimes an employer will attempt to hold an 'off the record' discussion with an employee with the view of resolving the situation at an early stage with a mutually agreed exit strategy. However, these sort of conversations are not without legal risk.
Employers should be extremely cautious about proceeding with such discussions because they may subsequently find themselves subject to legal claims that anything said by them was very much 'on the record' as far as the employee was concerned, and further, that those discussions may be able to be used against the employer in a litigation context, i.e. a constructive dismissal claim.
Constructive dismissal claims are commonplace, and often seen by the Employment Relations Authority (ERA). A precedent setting example was the situation seen in Blakeley v ACM New Zealand Ltd [2013] in Christchurch.
In this case the employer became dissatisfied with the employee's performance and approached the staff member with an offer to resolve the situation in the context of a 'without prejudice' discussion regarding an exit strategy whereby the employee would resign from their employment on agreed terms. The employer's offer was rejected by the employee who then successfully pursued a constructive dismissal claim.
The ERA ruled that the conversation which took place was not actually ‘without prejudice’, and that the employee was constructively dismissed due to the statements made by the employer.
In an employment law context, for a discussion between an employer and an employee to be protected through being 'off the record' or 'without prejudice' the ERA will look at if the employer can prove the following requirements are met:
- The existence of an employment relationship problem, or employment dispute that could give rise to a risk of litigation;
- That there is documentation (emails, letters, etc) regarding the particulars of whatever the problem, or dispute is about, e.g. a formal disciplinary or performance management process underway;
- That the employee understands what an 'off the record' and/or 'without prejudice' discussion means and agrees to participate in the conversation. This is best covered off by way of a formal letter explaining everything, including notifying the employee that they are entitled to seek independent advice and engage a representative if they wish.
If you face a situation like this, we strongly suggest you seek support and advice through Employers Assistance. We can assist in these conversations and there are often viable avenues available to resolving these scenarios to get the desired outcomes without being faced with a personal grievance. Using the right words and or non-incriminating letters is paramount.