There are key considerations to be reconciled when contemplating exit negotiations, whether under the current provisions of the Act or those contemplated by the Employment Relations (Termination of Employment by Agreement) Amendment Bill.
Senior Associate Lisa McWilliams-Smith writes about the proposed changes, requirements of the current legislation, and what employers and employees should consider when faced with exit negotiations.
Member’s Bill ‘Termination of Employment by Agreement’
To refresh your memory; the Policy behind the Bill is to allow an employer to initiate ‘protected negotiations’ without risk that the employee will bring any PG against the employer (as a consequence of the employer’s exit proposal or indeed any other cause of action).
Should the bill be passed into law, the employer would be able to propose dismissal to an employee, by requesting the employee to sign a settlement agreement for specified compensation, in return for the employee waiving their entitlement to raise any PG; ultimately by mutual consent.
An agreement made under subsection (1) of the Bill will only be enforceable if the employer has advised the employee to seek independent advice about the exit proposal and the employer has given the employee a reasonable opportunity to obtain independent advice before signing.
Further, negotiations leading up to the proposal to terminate would be inadmissible in any proceeding before the Authority, unless the communication was compiled with a dishonest purpose or to plan or commit an offence.
Conducting exit negotiations now
In the meantime, exit negotiations will only be ‘off the record’ if they are clearly understood by both parties to be in a ‘without prejudice’ context, for example, during a confidential mediation.
At mediation (private or held at MBIE) the parties and the mediator are bound by strict conditions of confidentiality. That means nothing that is said may be used in evidence or relied upon elsewhere. The ‘cloak of confidentiality’, the neutral context and the insights of the mediator allow the parties to get to the heart of the problem between them without fear that what they say can be used against them elsewhere.
Leading up to mediation, careful thought will need to be given to how to approach an exit. Hard positions or strong feelings once voiced cannot be unsaid and may be counterproductive to the parties parting ways in a dignified, reasonable fashion.
Pre-mediation with your lawyer or representative and the mediator is the perfect time to plan the substance of your half of the mediated exit conversation, i.e. the possibility of an exit, why, when, how and the possible inclusion of specific terms and conditions.
Opening up an exit negotiation outside of mediation may be perilous for the employer, given the inherent inequality of bargaining power, the mutual obligation to maintain a productive employment relationship and the real risk of claimed employment disadvantage if the employee is surprised by the employer’s proposal and not inclined to leave.
If discontinuation of employment is contemplated, the best practice approach in the current context includes meeting the requirements of natural justice, good faith and the current legislative provisions set out at s103A of the Employment Relations Act 2000.
Employers, and employees, may want to consider seeking advice and support at an early stage if they wish to open up delicate exit negotiations in a strategic, measured fashion towards the best outcome for all.
