A statement made as a genuine attempt to resolve a dispute will, generally, be “without prejudice”. The effect of this is that it will be inadmissible in Court or Employment Tribunal proceedings.
Employers often try to use the “without prejudice” rule when dealing with employees. For example, an employer may want to suggest to an employee that they part company amicably, usually in return for the employer paying the employee an agreed sum. However, the employer may want to keep its options open so that if the employee is not interested in going quietly, it has the option of doing whatever it needs to do to either make the employment relationship work or bring it to an end by following a proper procedure. The employer does not want the fact that it tried to short cut doing things properly in the first place to be used against it in any later Court or Tribunal proceedings.
Therefore, employers have learned to tell employees that the initial discussions about amicable separation are taking place on a “without prejudice” basis.
What Has Changed?
The Employment Appeal Tribunal (“EAT”) has had to consider whether, in very much these circumstances, the initial “without prejudice” discussions were, in fact, without prejudice.
In the case of BNP Paribas v Ms Mezzotero, the employee had returned from maternity leave to find that she had been side-lined. She raised a grievance but before the grievance process had been completed she was invited to an informal meeting and offered money to go quietly. The employer told the employee that this discussion was “without prejudice”. However, the employee subsequently tried to use the content of that conversation in support of her sex discrimination claim.
The EAT decided that she could. In order for the “without prejudice” rule to apply, there must (i) be a dispute between the parties and (ii) the communication in question must have been made for the purpose of genuinely trying to resolve that dispute. The EAT said that, here, there was no dispute. The fact that the employee had raised a grievance did not mean that there was necessarily a dispute. The grievance could be upheld, or dismissed for reasons acceptable to the employee, meaning that the parties may never actually be in dispute.
The consequence was that the employee was able to use what the employer had said during the conversation as evidence in her sex discrimination claim.
The EAT also said that discriminatory comments made during the course of “without prejudice” discussions would be admissible as evidence even if all the other “without prejudice” criteria had been satisfied.
What does this mean for employers?
Employers need to be aware that:
- what they say during what they intend to be “without prejudice”/off the record conversations may now be used against them by the employee in Tribunal and Court proceedings unless there is an existing dispute;
- if they make comments which could be viewed as discriminatory during a properly “without prejudice” conversation, then those comments could also be used against them by the employee in Tribunal proceedings. We believe that the EAT went too far here and that this element of the Decision may be successfully challenged in the future. However, for the time being, employers should be particularly careful what they say.
So, when will there be a “dispute”? The fact that an employee has issued a grievance will not, in itself, be enough. However, it is highly likely that a dispute will exist if:
- the employee has completed the grievance process and his/her grievance has not been upheld for reasons that the employee tells the employer he/she does not accept;
- the employee does not raise a grievance but either him/herself, or through a solicitor, accuses the employer of bad treatment or behaviour which the employer denies. The employee does not accept the employer’s explanation.
If an employer believes that a dispute does exist, given the uncertainty which will inevitably result from the EAT’s decision the best course of action, if the employee is legally represented, will be for the employer to make any without prejudice offers through the employee’s solicitor who is more likely to appreciate when a dialogue is properly without prejudice and when it is not.
However, it is often the case that an employer would like to part company with an employee because it has concerns about the employee’s performance, which it has not previously raised, ie where there is no dispute. What should an employer now do in this scenario?
- consider first having an “open” meeting with the employee at which concerns about performance are raised. This may prompt a reaction from the employee which the employer may be able to point to as a “dispute”.
- leave a gap of a few days and offer to hold a “without prejudice” meeting with the employee.
- arrange for a different person to hold the “open” and “without prejudice” meetings.
- make sure that there is an accurate and complete note taken of the “without prejudice” meeting.
- tell the employee that the meeting is “without prejudice” and they have a choice. Either:
- he/she can be performance managed. Explain that the employer has not pre-determined the outcome of the procedure. If this is the route chosen, the employer will follow a fair procedure and assist the employee to improve; or
- the employee may decide that he/she does not wish to go through the process, in which case the employer would be prepared to enter into an arrangement of amicable separation. The employer would be prepared to pay £x if the employee signs a Compromise Agreement. This offer is made without any admission of liability.
- Confirm the key points of the conversation in a letter, clearly marked “without prejudice” and give the employee a couple of days to consider the options
Following the meeting, the employee may either elect to be performance managed or to go.
Elects performance management
- Follow a full and fair performance management procedure which may result in the employee being fairly dismissed. OR
- Decide that, notwithstanding this, you want to dismiss the employee. The dismissal is highly likely to be unfair as no procedure has been followed, but the employer may decide that it would prefer a swift resolution. An offer to settle the unfair dismissal claim can be made at any stage.
Elects an agreed exit
Remember that no deal is done until the employee has signed the Compromise Agreement. The employee has only agreed to leave if terms are agreed. Therefore, until those terms are agreed, the employee’s employment should not be terminated.
Points to note
Be aware that if agreement is not reached or if the employer’s argument that a dispute exists is not successful:
- what the employer has said could be brought up during any subsequent Tribunal proceedings;
- the employee could use the content of the conversation as the basis of a constructive dismissal claim. He/she could say that, by having the conversation, the employer had destroyed the relationship of trust and confidence which should exist between employer and employee;
- if the meeting is not handled sympathetically, the employee could try to augment any damages awarded to him/her by claiming an amount in respect of injury to feelings (as reported in Employment Alert No. 82).
- if the process of negotiating terms becomes protracted, there is a risk that the employee may make an allegation that the employer is failing to comply with its legal obligations. In subsequent Tribunal proceedings, the employee could try to augment the level of damages awarded by claiming that the reason for any subsequent dismissal or resignation was that he/she had raised concerns about compliance with the law, ie make a “whistleblowing” claim. This would mean that the current cap for unfair dismissal and constructive dismissal damages of £55,000 would not apply.