18 January 2023
Law at Work - January 2023 – 3 of 5 Insights
The without prejudice rule, which effectively gives parties the freedom to negotiate settlement of their disputes without their communications being admissible in subsequent litigation, is often misunderstood. There is long-standing case law on when the rule applies, as well as a more recent statutory provision in section 111A of the Employment Rights Act 1996 (ERA 1996), which provides for the inadmissibility of pre-termination without prejudice discussions in cases where unfair dismissal is alleged. While it is true that employers may seek to abuse the rule by dressing up inappropriate or even discriminatory conduct as part of 'without prejudice' discussions, it is also the case that employees may without foundation allege that there has been improper conduct in such meetings. If clear impropriety is established, the protection of the without prejudice rule falls away, so a lot turns on whose version of events you believe.
In Garrod v Riverstone Management Limited, the EAT had to consider whether the conditions (as established by case law) were met for the without prejudice rule to prevail, namely that there was an extant dispute between the parties, there was a genuine attempt to settle it, and that on the facts there was no clear impropriety. (On the facts, it was not necessary to consider the statutory provision set out in section 111A of the ERA 1996.)
The earlier EAT case of BNP Paribas v Mezzoterro established that not all grievances will, without more, prove the existence of a dispute between the parties, rather the nature and context of the grievance must be considered. [In the BNP case, the employer sought to dismiss a pregnant employee in response to her raising a grievance. Evidence of what was said in a without prejudice meeting was admissible as no extant dispute was shown to exist.]
Ms Garrod returned from maternity leave in July 2019, having worked as a Company Secretary for Riverstone Management Limited (Riverstone) for a number of years. She notified the Company in October 2019 of a second pregnancy, then went off sick with anxiety. She lodged a grievance at the end of October, alleging discrimination on grounds of maternity, and harassment going back several years.
On 8 November, an external HR representative appointed by the Company invited Ms Garrod to a meeting for a 'preliminary discussion'. Ms Garrod described feeling ambushed when the representative quickly moved, without exploration of her grievance, to wanting a without prejudice discussion on terms of settlement. Those discussions were unsuccessful. In December 2019 a grievance meeting was held and in January 2020, Ms Garrod's grievances were not upheld. On 2 March 2020, Ms Garrod issued claims for discrimination on grounds of maternity and harassment. She then resigned on 16 March, amending her ET1 to include a claim for constructive dismissal.
In her particulars of claim, Ms Garrod made references to the fact and contents of the without prejudice discussion. The employer sought to agree with Ms Garrod that the references would be removed. After she refused to remove them, Riverstone made a successful application to have the references removed, an employment tribunal ruling that they were indeed without prejudice. A costs award of £3,400 was also made against Ms Garrod in respect of her conduct of the application. Mrs Garrod appealed to the EAT.
The EAT dismissed her appeal. The employment tribunal had been correct to find that there was an extant dispute, a genuine attempt to settle, and no impropriety. It had not misapplied the case law on impropriety. It had been entitled to prefer the respondent's version of events, namely that the without prejudice meeting was polite and professional rather than aggressive and overbearing. It distinguished the BNP case, pointing out that in that case the employee's victimisation claim was based on what happened at a meeting described as without prejudice whereas there was clearly already an extant dispute when Ms Garrod walked into the room.
The case highlights how the bar for establishing clear impropriety, such that the without prejudice rule falls away, is set high. It will only be in unusual or exceptional circumstances that the rule will be disapplied.
The desire to have a without prejudice meeting is often viewed by an aggrieved party as a 'smoking gun' which proves that the employer was out to get rid of them or acted in a biased way. However, as the EAT put it, "The point of the rule is that the policy aim of encouraging settlement of disputes outweighs the competing aim of allowing all relevant material to be placed before courts and tribunals. That is why the rule can be displaced only by very clear and very serious wrongdoing. Making a settlement offer which could, on one view, provide a clue to a party’s discriminatory attitudes falls far below that threshold."
Given that a without prejudice meeting is likely to be emotionally charged and the employee is likely to feel vulnerable, employers should give a lot of tactical thought about how the meeting is presented and conducted. One option would be to make clear in advance that a without prejudice meeting is sought so as to avoid later allegations of 'ambush'.
18 January 2023
18 January 2023