17 October 2012

Are 'without prejudice' conversations safe?

Are 'without prejudice' conversations safe?

Employer-employee relationships can become strained due to a number of different factors and sometimes both parties wish to amicably part ways and embark on what they term as 'off the record' or 'without prejudice' conversations with a view to entering into a compromise agreement. The Question is; if no agreement is reached can the content of those conversations be admissible in the employment tribunal?

Gallop -v- Newport City Council is a recent Employment Appeal Tribunal (EAT) decision which looked at the issue of admissibility of 'without prejudice' conversations. Mr Gallop was employed by the Newport City Council as a training officer. He claimed to be suffering from depression which had been brought about as a result of work related stress; he was eventually dismissed for gross misconduct. Prior to his dismissal, the parties made attempts to reach a compromise agreement however the attempts failed.

Mr Gallop brought claims for unfair dismissal and disability discrimination, only his claims for unfair dismissal succeeded. On the issue of compensation, during the remedy hearing, Mr Gallop when questioned by a wing member, confirmed that a compromise agreement was discussed and that he was happy with the money that was offered however his legal adviser was not therefore no agreement was reached. On this basis the tribunal concluded that had Mr Gallop not been dismissed there was a 50% chance that he would have accepted the compromise agreement. As a consequence his compensatory award was reduced by 50%.

Mr Gallop appealed the decision. The EAT held that the tribunal should not have admitted the contents of any 'without prejudice' negotiations without a 'clear waiver by the parties'. The EAT found that the parties had not voluntarily waived privilege in this case because the point only arose as a result of an enquiry by one of the wing members. Further the Employment Judge did not explain the issue of privilege to Mr Gallop therefore there was clearly no waiver. The tribunal had erred in considering the privileged information in their decision.

Thankfully this decision preserves the principles of 'privilege' and allows employers to continue to use 'without prejudice' negotiations as a genuine means of entering into a fair and amicable way to end a relationship. Just a small caveat though. Merely labelling a meeting or letter "Without Prejudice" is not enough to guarantee protection. There has to be a genuine attempt to settle a dispute in order for a Tribunal to refuse to consider it.

The government is in the process of developing this area of law as they intend to introduce the concept of 'settlement agreements', which will work in a similar way to compromise agreements, but the intention, is to simplify the concept particularly to encourage use for smaller employers in formal disputes. As with compromise agreements discussions relating to a 'settlement agreement' will not be admissible in a tribunal therefore they cannot be used against an employer in an employment tribunal. At the same time employees will continue to benefit from their employment rights when they choose to reject the offer of a settlement agreement. The finer details of how the 'settlement agreement' will work in practice are yet to be unveiled. We will keep you posted!