Applying the Without Prejudice Rule

In Garrod v Riverstone Management Ltd, the Employment Appeal Tribunal (EAT) upheld an earlier employment tribunal (ET) decision that an employee’s grievances for bullying, harassment and maternity discrimination amounted to an ‘existing dispute’. Accordingly, a conversation in which a settlement offer was discussed was judged to have been maintained under the without prejudice rule.

When considering the employee’s claim that the settlement proposal was advanced with a discriminatory motive, the EAT held this did not satisfy the ‘unambiguous impropriety’ exception which could also have rendered the without prejudice rule inapplicable.

When does ‘without prejudice’ apply?

The without prejudice rule exists to encourage parties to attempt to resolve disputes without resorting to litigation. Any offer made without prejudice cannot later be relied upon in legal proceedings as evidence against the party who made it.

However, simply labelling correspondence ‘without prejudice’ does not automatically provide this protection. The rule only applies when there is an existing dispute, and the without prejudice correspondence or conversation constitutes a genuine proposal or offer to resolve or settle that dispute.

Protected conversations

Without prejudice meetings differ from ‘protected conversations’, which do not require the prior existence of a dispute. Protected conversations allow employers to have ‘off the record’ conversations with employees, during which an agreement can be made giving rise to the termination of their employment.

Protected conversations are most likely to happen where an employer has identified performance issues, a conflict in personalities between employees or pending disciplinary action. There does not need to be a prior dispute between the employer and employee regarding such issues, so the employee does not need to be made aware of the issues in advance. 

The contents of protected conversations cannot be used as evidence in any subsequent ordinary unfair dismissal claim. They can, however, be used in evidence in cases of automatic unfair dismissal, such as on grounds of whistleblowing or discrimination relating to a protected characteristic.

Garrod v Riverstone Management Ltd

Ms Garrod was employed by Riverstone as a Company Secretary. On 30 October 2019 she raised a grievance alleging mistreatment, pregnancy and maternity discrimination, and that she had been subjected to bullying and harassment.

On 8 November, Ms Garrod attended a meeting for a ‘preliminary discussion’ during which the company’s HR and employment legal advisor, Harry Sherrard, discussed the main part of her grievance. He then said he would like to have a ‘without prejudice’ discussion.

In his evidence to the ET, Mr Sherrard described this discussion as an initial exploratory conversation about settlement and the possibility of a severance payment. He went on to describe the employment relationship as ‘fractured’ and ‘problematic’ and offered £80,000 to terminate Ms Garrod’s employment.

An agreement was not reached between the parties, and Riverstone did not uphold Ms Garrod’s grievances. Ms Garrod later resigned and brought claims of pregnancy/maternity discrimination, harassment, and unfair constructive dismissal, attempting to rely on the 8 November meeting as part of her claim.

The company argued that references to the 8 November meeting should be excluded from evidence based on without prejudice privilege, while Ms Garrod maintained that the meeting did not meet the threshold for without prejudice to apply.

A dispute over a dispute

Ms Garrod asserted that the grievance she had raised on 30 October 2019 did not constitute a dispute, and that the without prejudice rule should therefore not apply to the 8 November meeting. 

It is a common misconception that the submission of a grievance means that an existing dispute is in place. This is not necessarily the case. Much will depend on the subject matter of the grievance and the extent of the issues. To satisfy the ‘existing dispute’ requirement it should be clear that the parties have considered the prospect of litigation if they cannot resolve the grievance. 

In this case both the ET and the EAT found that the grievance raised by Ms Garrod on 30 October 2019 did in fact constitute an existing dispute.

Unambiguous impropriety

Ms Garrod also said the company had demonstrated its discriminatory attitude by raising the possibility of termination of employment. This, she said, amounted to ‘unambiguous impropriety’ which, again, would mean without prejudice privilege would not apply.

Unambiguous impropriety is an exception which exists to prevent without prejudice operating as a cloak to ‘perjury, blackmail or other unambiguous impropriety’. 

Cases where this exception has been applied successfully have historically been rare, and the threshold is high. In Garrod, both the ET and the EAT ruled that the threshold for ‘unambiguous impropriety’ had not been met. Although this decision is generally helpful for employers, it does not mean the exceptions for unambiguous impropriety or grievances not constituting disputes will not apply in future cases. Employers should, therefore, still exercise caution when entertaining the idea of without prejudice correspondence or protected conversations. 

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