Without Prejudice and Protected Conversations – Can you rely on them AND use the rules as a shield?

The without prejudice rule prevents anything written or said in a genuine attempt to settle an existing dispute from being presented as evidence in any subsequent litigation.

The main limitation with the without prejudice rule is that a dispute must exist. The common situation of an employer having an “off the record” conversation with an underperforming employee would not be covered, and the employer could be subject to a claim of constructive unfair dismissal or an argument that any subsequent dismissal was pre-determined and therefore unfair.

An existing dispute doesn’t require a formal claim to have been instigated, but the parties do need to have contemplated (or might reasonably contemplate) litigation if they cannot reach an agreement.

Protected conversations were introduced so parties could have “off the record” discussions where there is no dispute. As well as their content, their very existence cannot be disclosed in litigation (enabling internal discussions on the issue to be protected) and the protected nature of such conversations cannot be waived, even if both parties agree.

However, protected conversations have limitations. They are only inadmissible in ordinary unfair dismissal proceedings. Claims of discrimination, automatic unfair dismissal, unlawful detriment, or breach of contract are not protected, creating uncertainty (as employers will not know what claims an employee might later assert).

The Claimant in this case was employed as a Sales Director. On 12 August 2015 the Respondent's CEO, on the instructions of the Respondent’s Executive Board, held a meeting with the Claimant because of concerns about his performance and sales figures. The meeting was said to be on a without prejudice basis. At this meeting a number of options were discussed about the Claimant’s ongoing employment or its termination, including performance improvement and dismissal. There were a number of further without prejudice meetings in the following 10 months but no agreement was reached.

The Claimant was dismissed in August 2016 for gross misconduct and a breakdown in trust and confidence.

Significantly the Respondent relied in its defence, as one of the disciplinary allegations amounting to gross misconduct, on words spoken to the CEO by the Claimant at the meeting on 12 August 2016.  The Claimant alleged improper conduct by the Respondent in the form of bullying and threatening behaviours in the same meeting.

The Claimant brought wrongful and unfair dismissal claims.

At a preliminary hearing, the tribunal found that all of the relevant earlier meetings prior to the termination of his employment had been conducted on an agreed without prejudice basis (at common law) and that they also amounted to “protected conversations” pursuant to section 111A(1) Employment Rights Act 1996.  Evidence about the meetings was therefore inadmissible. The Claimant appealed against that finding.

The EAT confirmed that the without prejudice rule applied in principle. The correct question was whether the parties contemplated or might reasonably have contemplated litigation if they could not agree.  As the Claimant was called to a meeting to talk about his future and was presented with options that included the possible termination of his employment it was reasonable to consider he must have at least contemplated the possibility of litigation.

However the tribunal had not given sufficient consideration to whether the Respondent had waived privilege by relying on what had been said in the 12 August 2015 meeting as part of the disciplinary charges against the employee.  The EAT held that the Respondent could not waive privilege on parts of the meeting and rely on privilege in relation to other parts to shield its conduct.  Additionally the Claimant was entitled to have the tribunal examine the improper conduct. The case was remitted to the tribunal.

What does this mean for you or your business?

You cannot rely on parts of a without prejudice discussion or protected conversation whilst at the same time using the rules as a shield.

What do you need to be doing now?

• Be clear on the circumstances when the without prejudice rule and protected conversations may be used and the limitations of each.
   
• Where the without prejudice rule is used /protected conversations are had, give consideration to the implications of waiving privilege.

These notes have been prepared for the purpose of articles only. They should not be regarded as a substitute for taking legal advice.