"Without Prejudice" not always protection

by solicitor Katie Wood

The principle of English law that negotiations to resolve a dispute are 'without prejudice' and cannot therefore be referred to in any subsequent court proceedings is long standing. However two recent employment law cases have challenged the protection of 'without prejudice' status.

Although discussions do not have to be labelled as 'without prejudice' in order to enact protection, it is common practice to label them as such so that each party knows where they stand.  Back in 2004, in the Mezzotero case the Employment Appeal Tribunal (EAT) gave guidance on the circumstances when the courts would lift this 'without prejudice' protection. The Tribunal suggested that in discrimination cases it is particularly important that the Tribunal have all the facts before it and not to do so may be an abuse of the 'without prejudice' principle. However. two recent cases have again changed the position on 'without prejudice' discussions.

“Without Prejudice” discussions admissible in victimisation cases

Brunel University v Webster & Vaseghi considers issues of waiver of 'without prejudice' status. Two employees, having failed in a discrimination case, argued they were victimised by the University for what they saw as discrimination of a bona fide case against the University, as the University claimed the two employees had demanded excessive compensation.

The employees brought grievances against the University in the form of complaints of victimisation based on this statement. At the grievance hearing, the panel hearing the grievance heard oral evidence of what had taken place at the settlement discussions. It concluded that the reason the settlement discussions had failed was indeed that the employees had wanted more money so that the University statement saying they would not be bullied in a manner such as this was deemed acceptable. They therefore rejected the employees' grievances and issued a statement setting out their reasons.

The employees then brought claims of victimisation in the employment tribunal. They argued that it had been the university's idea to offer them money to settle their claims, not theirs, and sought to disclose at the tribunal hearing evidence from their solicitor as to the content of the settlement discussions. The university argued that the discussions were 'without prejudice' and so couldn't be disclosed.

The EAT decided that even though the discussions would ordinarily be 'without prejudice', in this case, the 'without prejudice' principle could not be relied on to prevent evidence of what had been said in those discussions from coming before the tribunal. The Court of Appeal later upheld the EAT decision that 'without prejudice' discussions for settlement of Professor Vaseghi's claim were admissible in a claim in which Professor Vaseghi alleged he had suffered victimisation as a result of a race discrimination claim he had brought against the University, and it was necessary to see these documents to prove the victimisation.

Framlington Group Ltd v Barnetson

In early 2005, Mr Barnetson started employment as chief operating officer at Framlington Group Ltd. He was told that his orally agreed terms and conditions would be confirmed in writing at a later date. However, when Mr Barnetson pursued this written confirmation, a difference of opinion arose as to the terms that had been agreed. Discussions around his terms took place until the end of October 2005, at which point, Framlington Group told Barnetson it intended to dismiss him at the end of the year.

Further negotiations ensued, during which a compromise agreement was produced and Barnetson set out the terms on which he would be prepared to settle. These discussions broke down and on 20th December 2005, Barnetson was given notice that his employment would terminate.

Barnetson brought proceedings for damages for wrongful dismissal in April 2006. Framlington alleged that certain parts of Barnetson's witness statement in support of his claim should not be allowed because they related to 'without prejudice' discussions that had taken place between the end of October and 20th December 2005. The High Court judge rejected this argument and Framlington appealed.

The Court of Appeal held that, once Framlington had told Barnetson it intended to dismiss him, the discussions that followed were 'without prejudice' and could not, therefore, be used as evidence in the court proceedings.

There was a public policy consideration underlying the 'without prejudice' rule namely, to encourage people to settle their disputes without resorting to litigation. In light of this aim, it was not appropriate to set a time limit prior to litigation before which any discussions would not be protected. Rather, courts should determine the point at which, during the course of negotiations, the parties contemplated, or might reasonably have contemplated, litigation if they could not reach agreement.

Using 'without prejudice' communications

* Make sure that there is an existing dispute between you and the employee before starting any 'without prejudice' discussions: this will usually mean following, or at least starting, your normal procedures before embarking on any such discussions.
* Obtain the employee's consent to any 'without prejudice' discussions. Ideally, the consent should be either in writing or witnessed by someone other than the person who is going to conduct the meeting.
* Keep the open procedures going and completely separate from any 'without prejudice' discussions.
* Ensure that no discriminatory remarks or comments which could found the basis of a discrimination claim are made during either open or 'without prejudice' discussions. Where the dispute between you and the employee relates to allegations of discrimination, do not make any concessions or admissions of discrimination in any 'without prejudice' discussions.
* Be aware that anything you say may ultimately be repeated in court.
* There is no need for litigation to be threatened or underway for negotiations to be protected. If it is clear that the parties understood that litigation might result if the negotiations failed, then such discussions are likely to be protected.
* Remember: the discussions in the Barnetson case were only protected from the point at which Barnetson was told of his employer's intention to dismiss him. Discussions during internal grievances are unlikely to be protected.

Katie Wood is an employment law solicitor at Burnetts in Carlisle.

For further information on handling employment law disputes, contact Katie on 01228 552222.