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08.11.16

How to make best use of the pre-settlement confidentiality rules


Recently the Employment Appeal Tribunal (EAT) looked at the issue of ‘protected conversations’ for the first time in a case called Faithorn Farrell Timms v Bailey.

‘Protected conversations’, introduced in 2013 under s.111A of the Employment Rights Act, are intended to enable an employer and an employee to have confidential discussions about ending employment where there is no dispute about the termination. If there is an existing dispute the legal 'without prejudice' rule may apply which prevents statements made in a genuine attempt to settle a dispute from being used as evidence in court. However, ‘protected conversation’ discussions can only be used in limited circumstances, as confidentiality will not be preserved in, for example, discrimination, breach of contract or automatically unfair dismissal claims.

But what happens when tribunal proceedings involve a number of different claims – can ‘protected conversation’ discussions be disclosed or not? And how should tribunals deal with the further complication of some of the discussions prior to the proceedings allegedly being ‘without prejudice’?

The Faithorn Farrell Timms case involved a part-time secretary in a law firm who maintained that in late 2014 her employer made it clear to her that it wanted her to work full-time in the future. Bailey was not happy about this and initiated settlement discussions with the firm under the ‘protected conversation’ rule. In January 2015 ‘without prejudice’ letters were sent by her solicitors, setting out her position and including proposals for a settlement. The employer’s letters in reply were not marked ‘without prejudice’.

The settlement discussions did not prove fruitful and Bailey raised a grievance, using the contents of her solicitor’s ‘without prejudice’ letters. The law firm did not question the letters’ inclusion and referred to them in the outcome of the grievance procedure.

Bailey subsequently resigned and brought claims of constructive dismissal and sex discrimination, referring to her settlement discussions and the ‘without prejudice’ letters.

Tribunal

When responding to her claim, her employer did not question whether these discussions and letters were admissible as evidence; this was only raised at a subsequent preliminary tribunal hearing. The employment tribunal decided that the documentation surrounding both the ‘protected conversation’ discussions and the ‘without prejudice' letters were not wholly inadmissible.

Both parties appealed this point to the EAT.

EAT

The EAT decided that the ‘protected conversation’ rule protected both the content of the discussions and the fact that discussions took place (including internal discussions between the employer’s staff) and there was nothing in the wording of the legislation that allowed the employer and the employee to ‘waive’ (give up) the confidentiality of the discussions, unlike in ‘without prejudice’ discussions.

Initially the EAT found that the correspondence was protected by legal privilege (which means it does not have to be disclosed to a third party) under the ‘without prejudice’ rules. However, the employer referring to the contents of the correspondence itself and not objecting to Bailey referring to the discussions on several occasions was enough to show that the employer had by implication given up that privilege.

Comment

Protected conversations have been widely used by employers, and probably will continue to be, especially where an employer has concerns about an employee’s performance. This case provides reassurance to employers about the confidentiality of such discussions. However, employers need to bear in mind that:

  • both the details and existence of a ‘protected conversation’ may be protected and inadmissible as evidence in relation to an ordinary unfair dismissal claim
  • the ‘without prejudice’ rule may protect pre-termination discussions, but will only apply if there is a genuine attempt to resolve an existing dispute
  • confidentiality cannot be waived under the ‘protected conversation’ rules in an ordinary unfair dismissal claim even if both parties want to disclose the content of those discussions, but it may be lost if either party has engaged in ‘improper behaviour’ such as harassment, intimidation, bullying or undue pressure
  • employers and HR staff need to understand the difference between the different types of discussions to ensure that privilege in ‘without prejudice’ discussions is not ‘waived’ by implication
  • the different types of discussions will protect different types of claim, with the ‘without prejudice’ rule applying to a wider range of claims than discussions under the ‘protected conversation’ rule
  • when dealing with, for example, an unfair dismissal claim coupled with a discrimination claim, tribunals have to ignore the discussions in relation to the unfair dismissal claim, but not the discrimination claim – even though the same employment judge probably will hear both claims.

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