When can a termination offer be kept from the employment tribunal?

The Employment Appeal Tribunal has recently ruled that a “without prejudice” offer should not be disclosed to the tribunal, even though it had been made in response to a grievance alleging pregnancy discrimination.

The general principle is that without prejudice communications are “privileged” and cannot be relied upon in evidence. The rule applies only where there is an existing dispute between the parties at the time of the communication and if the communication is part of a genuine attempt to settle the dispute.

Offer to Mrs Garrod was privileged

It may not always be clear if there is an existing dispute between the parties at the early stages of a grievance procedure. In this case Mrs Garrod raised a grievance upon her return for maternity leave. She was subsequently invited to a meeting where an offer to terminate her employment was made in return for a termination payment of £80,000. Mrs Garrod referred to the offer in her claim form and argued that it was not privileged. The employment tribunal disagreed and found that there was an existing dispute at the time of the meeting (making reference to the mention of legal rights and ACAS in the grievance documents).

In the appeal, the EAT referred to an earlier decision on without prejudice privilege involving Ms Mezzotero, which at first sight had similar facts. In that case Ms Mezzotero had raised a grievance complaining she had been discouraged from returning from maternity leave. She was subsequently invited to a meeting where an offer was made for her employment to be terminated in return for a redundancy payment of nearly £100,000. She brought a claim alleging that the act of seeking to terminate her employment (amongst other things) amounted to discrimination and victimisation. The EAT upheld the tribunal’s ruling that at the relevant time there was no existing dispute and the meetings were not genuinely aimed at settlement and therefore what was said at the meeting was not protected by privilege.

In this case the EAT distinguished Mrs Garrod’s case from Ms Mezzotero’s because the allegedly unlawful conduct that founded Ms Mezzotero’s case was said to have occurred at the allegedly privileged meeting whereas Mrs Garrod had only referred to the privileged meeting in her evidence to make the point that her grievance was not dealt with properly.

Offers to Mr Evanson not privileged

Mrs Garrod’s case can be contrasted with another recently published decision from the EAT involving Mr Evanson. Mr Evanson claimed unlawful deductions from wages (including over £80,000 for untaken holiday) following an agreement with his employer to terminate his employment. In his claim, Mr Evanson referred to a meeting at which various offers were made by his employer. He argued there was no relevant dispute at the time of the meeting and the conversations were not protected by privilege.

The EAT in this case relied on an earlier ruling from the Court of Appeal which says that when determining if there was a dispute at the material time, you must consider whether in the course of negotiations, the parties contemplated or might reasonably have contemplated litigation if they could not agree. The employment tribunal had noted that as there was no hostility around the termination arrangements with Mr Evanson, there was no reason for the employer at the time of the meeting to have litigation in contemplation. The EAT agreed, and the employer’s appeal against the tribunal’s ruling that the offers were not privileged was dismissed.

Comment

These cases illustrate that it can be difficult to be confident that termination discussions are privileged, particularly before legal proceedings have started.

One possible solution is to rely on section 111A of the Employment Rights Act 1996. This section allows an employer and employee to have an “off the record” conversation about bringing the relationship to an end. However, its scope is limited to ordinary claims of unfair dismissal and should therefore only be relied upon where you are dealing with a straightforward dismissal claim. The protection does not apply in other proceedings, including those for automatically unfair dismissal.