Without Prejudice – An Existing Dispute or No Dispute? (A practical guide)
As would be anticipated, the ‘without prejudice’ rule can apply to any employment tribunal claim. It allows parties to communicate with one another regarding settlement discussions, safe in the knowledge that those communications will be confidential and will not be referred to during court proceedings, as long as the communications are about a real dispute and represent a genuine attempt to settle that dispute.
The General Rule
Simply marking correspondence ‘without prejudice’ will not necessarily prevent a document from being disclosed.
If you have dealt with arguments over whether the ‘without prejudice’ rule applies or not, you will be familiar with the case of Barnetson v Framlington Group Ltd and another  EWCA Civ 502 and the arguments submitted on behalf of claimants and respondents alike.
It is very important to consider what label, if any, should be attached to correspondence. If correspondence, such as settlement offers, is marked ‘without prejudice’ you cannot expect it to be protected from disclosure in future proceedings, unless there is an existing dispute between the parties, or either party has contemplated litigation.
It is clear then, if there is no dispute, the without prejudice rule cannot be relied upon and the correspondence, despite being marked without prejudice, can be referred to in proceedings.
The Key Issue
The difficult point to establish is whether there is a dispute between the parties or not?
In a case in which I recently appeared for the claimant, who wanted to rely on a pre-termination settlement offer letter sent by the respondent and marked without prejudice, the Judge ruled there was no dispute and therefore the claimant was entitled to refer to the respondent’s settlement offer.
The respondent employer notified the claimant of a grievance against him. The claimant accepted responsibility for the actions from which the grievance arose. It was agreed that a meeting would be held to discuss the grievance and it was decided that the claimant would be given a formal written warning. However, lurking in the wings were two further grievances, which were not addressed at the aforementioned meeting, despite the respondent being aware of them.
Incidentally, at that first meeting the parties also discussed early retirement for the claimant, however it was the claimant’s case that he did not actually want to retire for several pertinent reasons. From these discussions flowed the pre-termination settlement offer letter.
The claimant maintained there was no dispute and argued that he should be entitled to rely on the settlement letter, whilst the respondent argued there was a dispute and it would be wrong to refer the letter into proceedings.
The Competing Arguments
In relation to the first grievance, the claimant accepted his responsibility, thus there was nothing in dispute;
Further, the first grievance was dealt with by way of a written warning prior to the settlement letter being written;
Neither party contemplated litigation in respect of the first, or subsequent, grievances; and
At the time the settlement letter was sent to the claimant, the respondent had not envisaged dismissing the claimant.
As regards the later grievances, despite these not being raised with the claimant at the meeting, the claimant accepted responsibility for his actions that led to these grievances. Similarly to the first grievance, there was no dispute between the parties, as the claimant was not disputing the matters that the respondent was asserting.
In cross-examination, the representatives for the respondent both agreed they had not envisaged litigation being pursued and had thought the matter was going to be dealt with without the need to go to court.
The discussions between the respondent and claimant about settlement and proposed termination of employment were evidence of the fact there was a dispute; and
The lack of animosity between the parties was not indicative of there being no dispute.
The Judge’s Ruling
The Judge decided there was no dispute, therefore the settlement letter was not protected by the without prejudice rule and, as such, could be referred to in subsequent hearings.
However, interestingly, the Judge commented that if the claimant brought a claim for unfair dismissal (which he had not done at this point) s.111A Employment Rights Act (“ERA”) 1996 would apply to the settlement letter, rendering it inadmissible in court proceedings, regardless of the without prejudice decision (s.111A ERA 1996 applies even where there is no existing dispute between the parties at the time of any settlement offer).
Be mindful of the way in which correspondence is labelled. What label, if any, should attach to correspondence? Is a label even necessary?
Consider whether either the ‘without prejudice’ rule or protection under s.111A ERA 1996, or indeed both, apply to the correspondence. It may be that communications are admissible under one provision but inadmissible under the other rendering the issue moot.
If there is a dispute about privilege, ensure a Judge, who will not be the Trial Judge, deals with the matter in advance of any trial. If that ‘without prejudice’ correspondence is the lynch pin of the case the determination of the issue may have a dramatic effect on any assessment of prospects of success.