Richard White, specialist employment solicitor at Withy King, considers a recent case concerning the application of the ‘without prejudice’ rule.
When an employment relationship hasn’t worked out for any number of reasons, employers often wish to end the employment relationship quickly in order to avoid unsettling the workforce and creating bad feeling, particularly when the employee is a senior member of staff.
Holding a ‘without prejudice’ meeting has been a useful way of achieving this. The ‘without prejudice rule’ operates to prevent ‘off the record’ written or oral communications between parties, which are made in a genuine attempt to resolve a dispute, from being brought up as evidence in subsequent litigation, thereby allowing the employer to cut to the chase and discuss exit/settlement terms at an earlier stage.
The scope of the rule in employment disputes was considered in the case of BNP Paribas v Mezzotero in 2004. In that case, the Employment Appeal Tribunal (EAT) made it clear that communications will not be ‘without prejudice’ unless a dispute has arisen between the parties and the communication was made for the purpose of resolving that dispute.
On the facts of the case, an employee’s grievance was held not to amount to a dispute since it could have been resolved amicably. The EAT also remarked that, for public policy reasons, discriminatory comments made in the course of without prejudice communications may be admitted as evidence more readily than in other types of dispute due to the ‘evils’ of discrimination.
Intention to dismiss
In the recent case of Framlington Group Limited and another v Barnetston (2007) the Court of Appeal re-considered the ambit of the without prejudice rule. In that case, the employer had already notified the employee of its intention to dismiss and the without prejudice discussions were meant to have covered the negotiations between the parties regarding the exit terms of the employee. At the time of the discussions, no litigation had been threatened.
The Court of Appeal held that the discussions were properly without prejudice and therefore inadmissible in the subsequent litigation. The Court of Appeal emphasised the desirability of allowing parties to settle prospective litigation and confirmed that the critical feature in determining whether discussions were without prejudice was the subject matter of the dispute, rather than how proximate in time the discussions were to commencing litigation.
The crucial question was “whether in the course of the negotiations the parties contemplated or might reasonably have contemplated litigation if they could not agree” and that would be decided on a case-by-case basis.
As a result of this recent case law, discussions which clearly relate to exit terms and the settlement of claims arising from such terminations are more likely to be without prejudice, which is a comfort to employers.
However the fact that the employer has merely commenced the disciplinary or grievance procedures is still unlikely to amount to a ‘dispute’ and therefore any discussions at this stage are still unlikely to be on a ‘without prejudice’ basis.
The position remains less clear in cases where discrimination may be alleged. The courts have recognised that public policy considerations may prevail to allow claims to proceed on the basis of the best available evidence (which may be found in supposed ‘without prejudice’ discussions).
Accordingly, employers should remain wary and, until clear guidance is given, the safest approach is to assume that evidence of discussions in such cases (at least before litigation has been threatened) may well be adduced as evidence before a tribunal in later proceedings.
The main principle gleaned from the Framlington case is that employers should only use ‘without prejudice’ conversations to settle disputes, not to create them. In practice this can be a difficult distinction but employers should consider the following:
- Remember, discussions with an employee do not become ‘without prejudice’ just because they are labelled as such.
- Allow disciplinary, grievance and performance management procedures to run as long as possible before starting ‘without prejudice’ discussions. The quicker you move to what you think is a without prejudice conversation, the less likely the conversation will actually be on a without prejudice basis. The more established the differences between the parties, the more likely it is that you will have evidence of a ‘dispute’ which can then be settled ‘without prejudice’.
- If possible, don’t ask the decision maker in the formal procedure to hold the ‘without prejudice’ discussion because it will look like they had already determined the outcome of the process thus invalidating the procedure.
- Always try to get the employee to make the first move in starting discussions about termination or settlement
- Always document ‘without prejudice’ proposals clearly – write ‘without prejudice’ at the top of the page when you commence the discussions. Record any counter proposals or comments from the employee similarly in writing. Make sure the employee receives a copy.
This is still an area where care should be taken since the Court of Appeal has emphasised that the position will be heavily dependent upon the facts of the case and, in particular, a tribunal’s assessment of what the parties understood the purpose of the discussions to be.
For further advice on this topic, please contact Richard White, specialist employment solicitor at Withy King, on 01225 425731 or email [email protected]