Off the record or without prejudice discussions can be a useful tool for employers when attempting to resolve a dispute with an employee. However, simply labelling the discussion as 'without prejudice' does not necessarily mean that it cannot be revealed later at Tribunal.
In the current economic climate employers (and occasionally
employees too) will often want to avoid time consuming procedures
and seek to negotiate an agreed departure. If the deal is
agreed – fine. However, if the deal is not done,
employers can find acts done and statements made in trying to agree
the deal used against them by the employee. Courts and
Tribunals encourage settlement so allow proper negotiations to be
covered by the without prejudice rule.
The 'without prejudice' rule
The without prejudice rule will prevent written and oral
statements made in a genuine attempt to settle an existing dispute
from being put before the Tribunal as evidence against the party
which made them. For the rule to apply there must be a genuine
dispute; both parties should agree that the rule applies and the
discussions must not be improper.
Employers need to be careful with discussions on the back of a
grievance being raised. A grievance is not necessarily a
dispute. A grievance may be upheld or dismissed for reasons
which an employee accepts, so that there is no dispute.
For the rule to apply both parties must agree to discuss the
matter on a without prejudice basis, and the employee must
understand and appreciate what 'without prejudice' means.
If, for example, an employer simply states that the discussion is
to be held on a without prejudice basis, bearing in mind the
unequal relationship of the parties and the likely vulnerable
position of the employee, it is unlikely that a Tribunal will
consider this to be a conscious agreement and the without prejudice
rule will not apply to this communication.
Finally, use of the rule must not be improper. It would be
an abuse of the rule to exclude evidence that undue pressure was
applied, (such as threatening the employee to settle the claim
against the company). Similarly, it would be an abuse for
admissions made in the negotiations, which support the
employee's claim, to be denied in Tribunal.
Employers need to be careful to ensure the rule applies properly
or what they do may come back to haunt them, as illustrated by the
cases below.
Vernon v London Borough of Hammersmith and
Fulham
For 6 years, Vernon made several applications for
promotion to Principal Social Worker. Each time she applied
she was unsuccessful. She brought a claim against her
employer on the grounds that they had discriminated against her due
to her race in the promotion procedure that they followed. During
the course of settlement discussions, the employer's solicitor
sent an email to ACAS confirming that they would not be making an
offer to settle the case. The email went on to criticise the
employee's abilities, stating that Vernon's poor report
writing was one of the reasons why she wasn't suitable for
promotion and referred to her Tribunal claim form, which contained
grammatical and spelling errors. The e-mail went on to state
that she was not "capable of the promoted role of principal
social worker". The solicitor agreed that the ACAS conciliator
could forward the correspondence to Vernon, who was still an
employee at the time. As a result of the content of this email, she
added a claim for victimisation arguing that these comments were
intended to deter her from pursuing her discrimination claim.
The Tribunal held that the email had a "profound effect"
on her as she found it extremely upsetting. The email went beyond
the employer's stated defence (that it had simply appointed a
better candidate) and implied that she was not capable of being
promoted then or in the future due to her lack of ability.
The Tribunal held that this put improper pressure on Vernon
to withdraw her claim. Therefore, even though the communication
with the ACAS conciliator was labelled 'without prejudice',
it was disclosable as evidence in the Tribunal. Although
ultimately the Tribunal rejected her discrimination claim, because
of the email sent by the employer's solicitor to ACAS, Vernon
was able to win her claim for victimisation.
BNP Paribas v Mezzotero
In the older case of BNP Paribas v Mezzotero,
the Tribunal confirmed that it was not sufficient for the employer
just to tell the employee that they intended to communicate on a
without prejudice basis – a dispute between the parties
had already to be in existence which they were genuinely trying to
compromise and the employee must agree. Here, a female employee
raised a grievance complaining that she had been prevented from
returning to her old job following a period of maternity leave. She
was invited to a meeting, at which she was told that her employer
wanted to talk 'without prejudice' and she was offered the
opportunity to leave in return for a settlement package. Ultimately
settlement was not achieved and the employee brought a claim in the
Tribunal at which she tried to use the content of the without
prejudice discussion as evidence. Essentially she wanted to show
that the response to her claim that the employer did not want her
back was an immediate offer of a package not to return. The
Employment Appeal Tribunal ruled that the employer's suggestion
of a settlement package was not protected by the without prejudice
rule, on the basis that there was no prior dispute about
termination. It was also decided that it was in the public interest
that allegations of unlawful discrimination in the workplace could
be heard by the Tribunal and, therefore, discriminatory comments
made in the course of the without prejudice discussions were
admissible as evidence.
What does this mean for employers?
- Ensure that there is a genuine dispute. If not – proceed with caution.
- Get the employee's agreement to the without prejudice conversation and ensure that the employee understands what it means.
- Be careful about the timing of without prejudice conversations during disciplinary, grievance or redundancy procedures. These various procedures could be held in tandem with without prejudice discussions. If settlement is not agreed then the employer should be able to rely on a fair procedure being followed otherwise.
- Try to avoid making any damaging admissions during without prejudice communications, especially in discrimination cases. It is advisable to keep focussed on the settlement terms.
- Ensure that all correspondence is marked "without prejudice and subject to contract" to highlight that written terms (usually a Compromise Agreement) will need to follow any oral agreement.
- Avoid overly aggressive approaches. A settlement achieved under duress can easily unravel.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.