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Without prejudice communications and discussions

protected conversations

 

The Without Prejudice Rule

This rule applies where in a dispute with your employer, any verbal or written communications between you that are aimed at genuinely resolving the issue are off the record and cannot usually be shown to an Employment Tribunal or Court.  It is a principle developed by the common law to encourage people to be frank and open during settlement discussions without compromising their prospective Employment Tribunal or Court case if they are not able to agree.

Settlement communications and conversations can be covered by the without prejudice rule even if they have not been described by you or your employer as such. Labelling a document as without prejudice may be an indication that there is a genuine dispute and attempt to settle, but it is not conclusive. The Employment Tribunal will look at all the facts of the case.[see Avonwick Holdings v Webinvest]

The legal principles of the without prejudice rule have been developed through cases that have come before the courts. The main points are discussed below.


When will communications and discussions be without prejudice?

  • You and your employer (the parties) must be ‘in dispute’. There must be a disagreement that you are trying to resolve. In Framlington Group Ltd and anor v Barnetson, the Court of Appeal said that the without prejudice rule applies where there is a dispute between the parties, even if they are not contemplating legal proceedings at the time. Secondly, the nature of the communications and discussions should show that the parties contemplated or could reasonably be expected to have contemplated legal action if they were unable to agree.
  • The parties must both agree that the discussions are without prejudice.
  • There must be a genuine attempt to reach settlement of a dispute. Just making a statement or asserting a fact does not qualify.
  • In Vestergaard Frandsen v Bestnet Europe , the court said that once a party has made an offer to settle, the without prejudice rule covers both the offer and the response whatever this may be. This means that if your employer makes you an offer to settle, and you reply asking for more money or different terms (counter- offer), ask for more information or reject the offer, the without prejudice rule will apply.
  • Mediation proceedings are confidential between the parties and between the parties and the mediator. The mediation agreement should say that communications between the parties and a mediator during a mediation will be without prejudice, in case the mediation does not end in a settlement. Even if it does not say so, the without prejudice rule will apply.
  • All negotiations conducted through ACAS are without prejudice and confidential. But the COT3 agreement itself is not. It is a legally binding enforceable contract, which means that you can make an ET claim for breach of the settlement terms  in the COT3.

When will communications and discussions NOT be without prejudice?

The without prejudice rule will not apply in the following situations, even if they have been expressly described as being without prejudice;

Termination disguised as without prejudice discussions

In BNP Paribas v Mezzotero, Ms Mezzotero was a Vice President with the bank – BNP Paribas. Shortly after returning to work from maternity leave, she raised a discrimination grievance complaining, among other things, that she had been prevented from returning to her old job. She was subsequently called to a meeting by her managers, who said they wanted to talk to her on a ‘without prejudice’ basis. They suggested that she terminate her job by mutual agreement on the bank’s standard redundancy terms, including a payment of approximately £100,000, collect her belongings, leave and seek legal advice.

Ms Mezzotero complained to the employment tribunal and referred to the without prejudice meeting. The bank said that those discussions were without prejudice and therefore should not be put before the employment tribunal (disclosed) as evidence.

The case went to the Employment Appeal Tribunal which ruled that the discussions at the so-called ‘without prejudice’ meeting were admissible at the Employment Tribunal. This was because the meeting was not an attempt to settle a dispute between the parties. Ms Mezzotero’s  grievance was about discriminatory treatment, whereas the meeting was about terminating her employment. BNP Paribas had made it clear at the meeting that her grievance was going to continue and had nothing to do with the termination. They were not in dispute because the grievance had not been heard. The grievance could have been upheld or dismissed for reasons that she would have found  acceptable; in which case the parties never reached the stage where they could properly be said to be ‘in dispute’. In addition, Ms Mezzotero did not know in advance that she was attending without prejudice discussions until she attended the meeting so there was no agreement on her part that the discussions would be without prejudice.


Cherry picking

Neither you or your employer can pick and choose when the without prejudice rule applies. This is what happened in Framlington Group Ltd and anor v Barnetson  and Avonwick Holdings v Webinvest . The Court said that an employer cannot rely on parts of a without prejudice discussion and at the same time use the without prejudice rule as a shield to protect itself. In addition, discussions and communications which were made  before there was a dispute cannot be labelled as without prejudice after a dispute has arisen. An example would be an employee who is transferred to another part of the country for work, he accepts the terms of his transfer in discussions and communications until he realises that the terms are not suitable. He then starts negotiating with his employer for a better transfer deal. All the discussions and communications before he started negotiations are not covered by the without prejudice rule.


Waiver of privilege

You and your employer can jointly agree that the without prejudice privilege should not apply to some or all of your settlement discussions. This is called waiver of privilege. The caveat is that BOTH of you must agree – Cowen v Rentokil Initial Facility Services (UK) Ltd (t/a Initial Transport Services)

 

Implied waiver

In Brunel University and anor v Webster and Vaseghi the Court of Appeal said that in certain exceptional circumstances, the behaviour of the parties shows that they intended to waive the without prejudice rule. Professor Vaseghi and Ms Webster were both employees of Brunel University and sued the University for race discrimination in the Employment Tribunal (ET).

Settlement discussions failed and the case continued to the ET where Professor Vaseghi and Ms Webster lost their case. After they lost the case, Brunel University’s Vice-Chancellor wrote in his quarterly newsletter that the University had spent over £60,000 defending two particular claims, and that the University would ‘defend its reputation against unfounded allegations, especially when these are accompanied by unwarranted demands for money’.

Professor Vaseghi and Ms Webster raised grievances about what was said in the newsletter, because it was the University that had started the discussions about money during the settlement negotiations. The grievances were heard by an independent committee, which concluded that their grievances were unfounded.  During the grievance proceedings, the committee was told what had been said and done in the settlement negotiations.

In August 2005, Professor Vaseghi and Ms Webster sued Brunel University again in the ET. This time they sued for victimisation because the comments in the newsletter was victimisation because of their previous race discrimination claims. They included what had been said during the settlement discussions to their ET1. The University also attached the grievance committee report to its ET3. .

The ET said that the references to the settlement discussions were inadmissible because of without prejudice privilege, but the grievance reports attached  to the University’s ET3 were not covered by the without prejudice rule. This was because the University had waived its right to claim privilege by hearing evidence of those discussions at the grievance hearing and putting the findings into the panel’s reports. The ET said that if the University had wanted to keep the without prejudice privilege, they should have said so at the grievance stage.

Brunel University appealed to the Employment Appeal Tribunal (EAT), but the EAT agreed with the ET.  The University then appealed to the Court of Appeal which agreed with the ET and EAT and threw out their case.  The Court said that in most cases where a grievance meeting takes place in the usual way, there will be no question of waiver if the parties mention matters covered by without prejudice privilege. The grievance proceedings were effectively a hearing of Professor Vaseghi’s and Ms Webster’s  victimisation complaints  by an independent panel. Both parties gave evidence about the previous negotiations without saying that they should be covered by the without prejudice rule. For this reason, they had both waived the without prejudice rule.


Perjury, blackmail or other ‘unambiguous impropriety’

In the case of Unilever Plc v Procter & Gamble the Court of Appeal said that there are certain instances where justice requires that the without prejudice rule should not apply even if the parties have agreed that it should.

These include;

  • A dispute about whether the without prejudice discussions and communications have resulted in an agreed settlement.
  • Where a settlement agreement was obtained by misrepresentation, fraud or undue influence.
  • If the without prejudice rule is used to cover up perjury, blackmail or other “unambiguous impropriety”.
  • Where the without prejudice rule covers an offer made “without prejudice subject to costs” in a Calderbank Letter. Calderbank letters or offers allow an offer of settlement which has been labelled “without prejudice subject to costs” to be considered by the court on the question of costs at the end of the hearing.

An example of unambiguous impropriety is in the case of Pedropillai v Pricewaterhouse Cooper LLP [2011].  During a negotiation meeting, Mr Pedropillai was told that he would not be able to continue as a partner with the company if he continued with his race discrimination claim. The ET said that this was an unambiguous act of victimisation. It was clear that he was being threatened with dismissal if he continued his claim. For this reason, the negotiations and discussions came under the unambiguous impropriety exception and would no longer be covered by the without prejudice rule. Mr Pedropillai was allowed to rely on the evidence for his race discrimination claim, which he won.


Interpretation and rectification

Another exception is made where the terms of a settlement agreement need to be interpreted or corrected [see Oceanbulk Shipping and Trading SA v TMT Asia Ltd and ors 2010]. This was a commercial dispute which led to without prejudice negotiations between the parties and a written settlement agreement. But then, another dispute arose about the interpretation of the terms of the settlement agreement. TMT Asia said that some of the discussions and communications should be allowed in evidence as an exception to the without prejudice rule otherwise the settlement agreement could not be properly explained. The Supreme Court agreed with TMT Asia. The Court said that the without prejudice rule serves the important public policy of encouraging parties to settle their differences.  Settlement would be encouraged if parties to a negotiation knew that in the event of a dispute about what a settlement agreement meant, facts which came out  during negotiations would be admissible to make sure of their true intentions.


Heads up!

  • Even though settlement discussions and negotiations will be bound by the without prejudice rule, the settlement agreement itself is not bound by the rule, and any documents or references to the subject matter of the negotiations that are mentioned in the document itself can be put before an Employment Tribunal or Court as evidence. [see BGC Brokers v Tradition (UK)]
  • During negotiations, if you want to use a document or record and not have it bound by the without prejudice rule, mark that document as “OPEN CORRESPONDENCE” .
  • Be smart and summarise the details of a relevant telephone or ad-hoc conversation, and send it to the person, confirming that you had the conversation, marked “without prejudice” or “open correspondence” as needed.
  • Remember that tagging any correspondence as without prejudice gives it specific legal protection, and you will not be able to use it any subsequent legal proceedings. If you are not yet in dispute and are just concerned about other people seeing it, mark it as “PRIVATE AND CONFIDENTIAL” rather than without prejudice.

Updated: 16/03/2020

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