How to have without prejudice off-the-record discussions safely: peril and prejudice

Michael Farrelly looks at the perils of using off-the-record discussions between employer and employee in disputes.

Conciliatory correspondence can often create problems rather than solve them. As Jane Austen’s Mr Darcy discovered following his infamous letter to Miss Bennett in Pride and Prejudice. With the global recession, credit crunch and potential property crash on the horizon, employers will no doubt be looking to restructure and re-organise their organisations with resultant dismissals.

Often, and particularly at senior level, employers do not wish to go through a lengthy, time-consuming procedure and instead will use ‘without prejudice’ or ‘off the record’ approaches to negotiate an employee’s departure. However, difficulties arise when an employee refuses to do a deal and instead attempts to rely on the details of the negotiations as the basis of a claim.

Historically, employees could not adduce as evidence details of without prejudice negotiations: such details were privileged. It is a common approach by employees and, in particular, litigants in person to try and produce letters that were intended to be without prejudice to do the reverse and prejudice their former employer’s position. As recently as February 2008 in the case of Brodie v Ward, the Employment Appeal Tribunal (EAT) considered the issue of whether or not an employee can rely upon a without prejudice letter sent by the employer’s solicitors.

The ‘without prejudice’ rule

It is a long-standing tenet of UK law that parties should be encouraged to settle disputes, without recourse to the courts or tribunals. A fundamental aspect of this principle was to allow without prejudice communciations between the parties in an effort to reach settlement. However, in 2004, the EAT held, in the case of BNP Paribas v Mezzotero, that without prejudice discussions that did not arise from a “genuine dispute” could be relied upon by the employee in founding a claim. Furthermore, the EAT held that the fact that the employee had raised a formal grievance did not amount to a genuine dispute. The impact of this was widespread: employers could no longer seek to use the rule without considerable risk. It has also been suggested that a without prejudice conversation or letter could be relied upon to prove that any disciplinary action was pre-judged. One of the results of this could be that any dismissal would be automatically unfair and the award subject to a potential 50% uplift under the 2004 Dispute Resolution Regulations.

However, the Court of Appeal in Framlington Group Limited v Barnetson went a long way to restoring the sanctity of the without prejudice rule in finding that, in the absence of any “unambigous impropriety” – ie, fraud, blackmail or perjury on the part of the employer – without prejudice communications would be excluded from being used as evidence in the proceedings.

Despite the decision of the EAT in Framlington, this did not stop Brodie, in the latest case, trying to rely upon the without prejudice letter from her employer’s solicitors as the “last straw”, entitling her to claim constructive dismissal.

The claim was unsuccessful and the letter was held privileged under the without prejudice rule, so it could not be relied upon to support a case.

So while it appears that employers can safely use without prejudice correspondence and conversations, no doubt employees will continue to seek to rely upon such information. The issue becomes even more complicated when litigants in person refer to both open and privileged matters in correspondence. As a result, the warning to employers is clear: proceed with caution.

Tips and good practice

Employers should not make proposals that are tainted with discrimination, such as using without prejudice discussions to get rid of all women or all employees over, say, 55 years of age. These are extreme examples, but in such instances employees can probably rely upon without prejudice communications as evidence of discrimination.

Avoid putting too much pressure on the employee or using misleading facts. You may be anxious to settle a case, but a settlement achieved under duress may easily unravel.

Despite the reassurance of the recent cases, it would be advisable to use without prejudice proposals with great care outside of an actual dispute. Calling someone in ‘out of the blue’ and presenting them with dismissal terms is fraught with danger. It is also advisable and essential not to introduce proposals too early during any ongoing process. For example, in a redundancy situation don’t introduce proposals before commencing consultation. It is good practice for all employers to make it clear when they are using without prejudice proposals and to separate these from any other open correspondence that forms part of the actual dismissal process, such as an ‘at risk of redundancy’ letter.

As long as it is properly handled, however, it should still be possible for employers to approach employees on a without prejudice basis rather than go through what could be a damaging, time-consuming and pointless disciplinary or dismissal procedure.

Key points

  • Try to ensure there is a genuine dispute between the parties and, if not, proceed with great caution
  • Gather evidence of the actual dispute and watch out for good appraisals when you allege poor performance and or conduct
  • Be careful in the timing of raising without prejudice discussions during ongoing grievance and or disciplinary procedures
  • Ensure all correspondence is marked ‘without prejudice’
  • Do not indiscriminately use without prejudice discussions to remove individuals without good reason or any warning
  • Do not make proposals aggressively, fraudulently or in a manner intended to blackmail the employee
  • Give the employee sufficient time to consider the proposals and see advice
  • Take particular care in discrimination cases

Michael Farrelly, partner at RadcliffesLeBrasseur

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