In recent years, there has been a lot of ink expended on the differences between protection offered by the common law “without prejudice” privilege compared with the statutory based pre-termination negotiations.
The concepts are very similar. They allow communications between an employer and employee in certain circumstances to be protected by confidentiality and to not be admissible in any future dispute should this occur. However, subtle differences exist between the two notions and they can only be used in certain prescribed situations.
The Employment Appeal Tribunal (“the EAT”) has laid down some important guidance on the scope of section 111A of the Employment Rights Act 1996 (“the ERA”) which provides that pre-termination negotiations (also known as “protected conversations”) are inadmissible in unfair dismissal cases.
In the case of Faithorn Farrell Timms LLP v Bailey, the EAT held that any mention of the fact that pre-termination negotiations have taken place is inadmissible in a subsequent employment tribunal hearing for unfair dismissal, not just the specifics of any settlement offers made. The ERA therefore extends further than the concept of “without prejudice” privilege which can allow reference to negotiations having taken place but precludes the release of details of any offers. The EAT also found that protected conversations cannot be waived.
The EAT was silent on the question of whether section 111A could apply to negotiations where an employer has failed to make any settlement offer, or to the extent in which an employer's conduct amounts to "improper conduct". Such discussions would remain admissible under section 111A(4) and left to the employment tribunal to consider.
Let’s make sense of where this case leaves us going forward:
Without Prejudice Rule
S.111A ERA 1996
Which claims are covered?
A wide range of potential claims
Unfair Dismissal only
Do the parties need to be locked in a dispute for it to apply?
Can existence of negotiations to settle be admissible at a future tribunal?
Can terms of the negotiations be admissible at a future tribunal?
Can confidentiality be waived, either impliedly or expressly?
No (unless in case of impropriety where ET will determine admissibility)
The case demonstrates that complicated situations can arise when negotiations can potentially be covered by both the “without prejudice” rule and the ERA.
It drives home the point that a tribunal can consider evidence in relation to a breach of contract or a discrimination claim, but then disregard the same evidence in relation to an unfair dismissal claim. However, this result may present practical difficulties for tribunals in safeguarding that they are not influenced by the evidence they have already heard. Employers should remain cautious of using protected conversations in any circumstances other than a potential unfair dismissal claim, as the ERA does not afford the necessary protection of inadmissibility.
Going forward, it is a useful case for employers. As it is now also clear that section 111A privilege cannot be waived, it is important for employers to maintain open correspondence with the employee during any period of negotiations covered by section 111A if they want this information 'on record' for the purposes of the tribunal.
The open correspondence route allows the employer scope to demonstrate to a tribunal that communication was on-going, making it easier to explain away any apparent delays that took place whilst there was an agreed pause in proceedings during any future litigation.
In addition, employees who do not receive the most favourable of settlement offers do sometimes try to refer to the fact or content of protected conversations in a future grievance. This case appears to stop this tactic dead in its tracks.
If you would like any further information in relation to terminating the employment relationship, settlement agreements or any other HR queries then please contact our Employment Law Solicitors on 0808 168 5550 or email email@example.com.