In this article...

• The background
• Waiver of privilege
• Negotiations before litigation
• What does this mean for me?

The background

The “without prejudice” rule means that correspondence or discussions aimed at settling a genuine dispute between employer and employee may generally not be relied on as evidence in legal proceedings. This is sometimes referred to as a form of legal privilege. The underlying policy is that the parties should be encouraged to settle their disputes without resort to litigation, and should not be discouraged by the possibility that anything said in the course of negotiations may subsequently be used to their prejudice.

“Without prejudice” privilege does not apply where it is waived by both parties. Two recent Court of Appeal cases have helped to clarify when discussions are covered by the “without prejudice” label and the circumstances in which the privilege can be waived.

Waiver of privilege

In Brunel University and anor v Webster & Vaseghi two employees (“the claimants”) brought race discrimination claims against Brunel University. Settlement negotiations took place but no settlement was reached. Both subsequently lost their claims before the employment tribunal. Some time later, the Vice-Chancellor of the university published a statement in a newsletter suggesting that the claims had been unfounded and had been accompanied by unwarranted demands for money.

The claimants both brought grievances against the university, which were heard by an independent panel. During the grievance hearing, which took the form of a mini-trial, the parties referred to the settlement discussions. The panel rejected the grievances and the two claimants brought victimisation claims against the university. The question arose as to whether the tribunal was precluded by the “without prejudice” rule from considering evidence of the settlement discussions.

The Court of Appeal held that both parties had waived “without prejudice” privilege. The Court accepted that, in most cases, there will be no question of waiver if the parties mention privileged matters in the course of an internal grievance hearing. However, the facts of this case were unusual in that the grievances were determined by an independent panel which heard evidence of the settlement negotiations from both parties. This bilateral waiver of privilege was evidenced by the fact that both the claimants and the university had referred to the settlement negotiations in their employment tribunal pleadings.

The Court also referred to BNP Paribas v Mezzotero, in which the EAT suggested that the “without prejudice” rule can be set aside where the content of the settlement discussions reveals unlawful discrimination by the employer. The Court refused to decide that point, but did acknowledge that it may sometimes be difficult to prove victimisation if the “without prejudice” rule applies fully in relation to discrimination cases.

Negotiations before litigation

The case of Framlington Group Limited and anor v Barnetson involved consideration of whether discussions which arose prior to litigation were covered by “without prejudice” privilege.

Mr Barnetson was employed for a fixed term subject to earlier termination on notice. A dispute arose as to the terms of his employment and there were a number of discussions, stated by Framlington to have been on a “without prejudice” basis. There was no resolution and Mr Barnetson was dismissed. He brought proceedings in the High Court for wrongful dismissal. In his witness statement he detailed the discussions that had taken place.

The Court of Appeal held that for the “without prejudice” rule to give effect to the public policy underlying it – namely, the settlement of disputes – it can be engaged prior to the start of litigation. It was the content of the discussions between the parties that was important, rather than the proximity of those discussions to any future litigation. The crucial consideration was whether the parties contemplated or might reasonably have contemplated litigation if they could not agree.

In this case, the discussions that took place before Framlington issued notice of dismissal demonstrated that the parties were already at odds over Mr Barnetson’s contractual entitlement, and the manner and content of those that took place afterwards indicated that litigation was in both parties’ minds. Accordingly, the discussions represented a genuine attempt to resolve a dispute and were subject to the “without prejudice” rule.

What does this mean for me?

The above cases provide some clarity as to when “without prejudice” privilege can be invoked and waived. Although each case is fact-sensitive, a number of general points can be made.

		While the use of the “without prejudice” label may provide a degree of clarity as to the parties’ intentions, it is not determinative of whether the discussions are covered by that privilege.
		In most cases, the parties will not be held to have waived privilege where they refer to the content of settlement negotiations during the course of an internal grievance hearing. The position is likely to be different, however, where the grievance is determined by an independent panel, as may be the case in some public sector organisations.
		Employers who wish to rely on “without prejudice” privilege should avoid referring to settlement negotiations in their ET3 or in witness statements, since this may be treated as evidence that privilege has been waived.
		From the employer’s point of view, there is a risk that the “without prejudice” rule may be set aside to allow the employee to adduce evidence in support of a discrimination claim.
		“Without prejudice” privilege can apply to negotiations that take place before the parties start litigation, provided the discussions represent a genuine attempt to settle a dispute and the parties might reasonably contemplate litigation if they cannot agree.