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Does an Employee’s Grievance Trigger the ‘Without Prejudice’ Rule?

In Garrod v Riverstone Management Ltd, the Employment Appeal Tribunal considered whether the submission of a grievance triggered the “without prejudice” rule, and in what circumstances the “unambiguous impropriety” exception could be relied upon to negate privilege.

Statements made in a genuine attempt to settle an existing dispute will ordinarily be inadmissible as evidence. This “without prejudice” rule is designed to encourage parties to settle their disputes without having to worry that a settlement offer they make might later be used against them in proceedings. However, simply marking correspondence “without prejudice” will not bring it within the scope of the without prejudice rule. The communications must be a genuine attempt to settle an existing dispute, where the parties believe or could reasonably believe that a failure to settle will result in litigation.

The “unambiguous impropriety” exception will negate the without prejudice status of correspondence, if excluding the correspondence from proceedings would conceal blackmail, perjury, or other “unambiguous impropriety”. The limits of this rule were considered in Swiss Re Corporate Solutions Ltd v Sommer earlier this year – you can read more about that case here.

In Garrod v Riverstone Management Ltd, Mrs Garrod was employed as a Company Secretary by RM Ltd. She raised a grievance on 30 October 2019, alleging pregnancy and maternity discrimination, bullying and harassment by three senior managers shortly after returning from maternity leave. On 8 November 2019, Mrs Garrod had a meeting with the company’s external HR and employment law adviser, to discuss the grievance. During the meeting the adviser requested that they have a without prejudice conversation – Mrs Garrod, who had a law degree, did not ask what this was, and so the adviser assumed she understood. The adviser described the relationship between Mrs Garrod and the company as “fractured” and “problematic”, before proposing the company’s settlement offer of £80,000. No agreement was reached at this meeting; the company ultimately rejected Mrs Garrod’s grievance, and Mrs Garrod resigned.

Mrs Garrod brought Employment Tribunal claims of discrimination, harassment, and constructive unfair dismissal. In her particulars of claim, she made reference to the 8 November 2019 meeting; RM Ltd argued that these references should be excluded, on the grounds that discussions took place on a “without prejudice” basis.

At a preliminary hearing to determine the issue, an employment judge found that the without prejudice rule applied to the settlement offer made at the 8 November meeting, because there was an existing dispute at the time of the meeting, and the offer was a genuine attempt to settle this dispute before it evolved into litigation. The judge also rejected Mrs Garrod’s argument that the adviser had been overbearing and aggressive and as such the unambiguous impropriety exception applied. The judge preferred the adviser’s account of the meeting, finding that he had been professional and polite.

Mrs Garrod appealed to the Employment Appeal Tribunal (EAT). In doing so, she cited the similar EAT case of BNP Paribas v Mezzoterro, in which the EAT held that settlement discussions with an employee who had submitted a grievance alleging discriminatory treatment after returning from maternity leave were not covered by the without prejudice rule. She also argued that RM Ltd had sought to use the without prejudice rule to push her out of her job for discriminatory reasons, and that it was unambiguously improper for the company’s HR adviser to have told her that the relationship was fractured and problematic, implying that she had no future there if she did not accept the settlement offer.

The EAT dismissed Mrs Garrod’s appeal on both points. On the question of whether there was an existing dispute, raising a grievance was not sufficient by itself to establish this, but in Mrs Garrod’s case it was relevant that all of her claims were based on events and allegations set out in her grievance. The Employment Tribunal was therefore entitled to find there was an existing dispute and that the settlement discussions were covered by the without prejudice rule. In contrast, the claims in the Mezzoterro case had, in part, been based on the employer’s conduct during the settlement negotiations themselves, and there was not an existing dispute at the time of the negotiations.

On the question of unambiguous impropriety, the Tribunal had been entitled to prefer the evidence of the company’s adviser on the nature and content of the discussions. The EAT noted that a review of the relevant case law in the Mezzoterro case had made it clear that there was a very high bar to establish unambiguous impropriety. It added that the whole point of the without prejudice rule was to encourage settlement of disputes over and above the competing aim of giving courts and tribunals access to all relevant material, and accordingly the rule will be disapplied only in “the very clearest of cases” or “in truly exceptional and needy circumstances”. Making a settlement offer which could, on one view, provide a clue to a party’s discriminatory attitudes falls far below that threshold.

The decision of the EAT in this case shows that when an employee submits a grievance, this may be sufficient to establish that there is an existing dispute and that subsequent settlement discussions will be protected by without prejudice privilege. This is relevant because the without prejudice rule affords much greater protection to employers than a ‘pre-termination negotiation’ or ‘protected conversation’ under s.111A Employment Rights Act 1996, which only makes settlement discussions inadmissible in ordinary unfair dismissal claims and does not assist if an employee makes other claims, such as for discriminatory treatment.

It is important to stress that each case will turn on its facts. Not every grievance will establish an existing dispute, and much may depend on the content of the grievance as compared with the legal claims which are pursued further down the line. Accordingly, employers should continue to exercise caution when engaging in settlement discussions and avoid saying anything which would undermine the company’s position should it later come to light as part of legal proceedings.

If you would like advice on handling an employee grievance or conducting settlement negotiations, or both, please get in touch with us at [email protected]