Kevin Gallagher v McKinnon’s Auto and Tyres Ltd

The appeal concerned the admissibility of evidence of pre-termination negotiations under section 111A of the Employment Rights Act 1996 and the scope of the impropriety exception in subsection (4). The Employment Tribunal found that the parties had engaged in pre-termination negotiations but that nothing said or done was improper, and therefore both the fact and content of those negotiations were inadmissible. The appellant advanced three grounds of appeal, each asserting that the Employment Tribunal's findings were perverse: (1) that the directors had decided the claimant's role was redundant and thus had effectively threatened dismissal if the offer was not accepted; (2) that the meeting had been arranged under false pretences, creating a unfair surprise; and (3) that a 48-hour period to respond constituted undue pressure contrary to Acas guidance. The Employment Appeal Tribunal held that the Employment Tribunal had properly applied the statutory test, had made open findings of fact after seeing and hearing witnesses, and that none of the three grounds demonstrated perversity or an error of law. The appeal was dismissed.

This is an appeal from an Employment Tribunal preliminary decision about whether evidence of pre-termination negotiations was admissible in an unfair dismissal complaint. The claimant sought to rely on statements made at a meeting on 1 August 2022 and in subsequent text messages. The respondent maintained that those discussions were inadmissible under section 111A of the Employment Rights Act 1996. The Employment Tribunal held that the meeting and messages were pre-termination negotiations and, having made findings of fact after hearing witnesses, concluded there was no impropriety under section 111A(4); accordingly the fact and content of the negotiations were inadmissible.

Nature of the claim: complaint of unfair dismissal; relief sought was to admit as evidence the pre-termination negotiations as part of the unfair dismissal complaint.

Procedural posture: preliminary hearing before the Employment Tribunal on 4 October 2023 to determine admissibility; appeal to the Employment Appeal Tribunal on a point of law (perversity of factual findings) decided 25 September 2024.

Issues framed:

• whether the discussions on 1 August 2022 were pre-termination negotiations within section 111A;
• whether anything said or done during those negotiations was improper or connected with improper behaviour and therefore admissible under the subsection (4) exception;
• whether the Employment Tribunal's factual findings that there was no impropriety were perverse or otherwise a legal error.

Court's reasoning: the Employment Appeal Tribunal reviewed the statutory framework, the Acas Code of Practice on Settlement Agreements (paragraphs 11–19), and relevant authorities. It emphasised that the Employment Tribunal must make primary findings of fact when impropriety is alleged, and that an appeal succeeds only on a point of law or where a factual finding is perverse. The Employment Appeal Tribunal considered each ground alleged to demonstrate perversity and concluded that the Employment Tribunal had been entitled, on the evidence it heard, to find the meeting was conducted calmly, that the directors did not indicate an inexorable determination to dismiss the claimant if he refused the offer, and that the 48-hour period related only to a verbal proposal with subsequent written terms to follow. On that basis the Employment Appeal Tribunal dismissed the appeal and directed that the Employment Tribunal should determine the substantive unfair dismissal complaint without regard to the inadmissible evidence. The judgment also noted the importance of Acas guidance and the distinction between redundancy processes and disciplinary processes when assessing undue pressure.

Appeal dismissed. The Employment Appeal Tribunal held that the Employment Tribunal had correctly identified and applied the statutory provisions in section 111A of the Employment Rights Act 1996 and the Acas guidance, had made permissible primary findings of fact after hearing witnesses, and its conclusion that there was no impropriety was not perverse. Accordingly the pre-termination negotiations remained inadmissible and the Employment Tribunal should proceed to determine the substantive unfair dismissal complaint without that evidence.

Preliminary hearing in the Employment Tribunal to determine admissibility on 4 October 2023 (employment tribunal judgment not separately cited in this text). Appeal to the Employment Appeal Tribunal decided on 25 September 2024, neutral citation [2024] EAT 174.