The law says that evidence of pre-termination negotiations is inadmissible in unfair dismissal cases. In Faithorn Farrell Timms LLP (FFT) v Bailey, the Employment Appeal Tribunal (EAT) held that this covers not just the content of the discussions, but also the fact that they have taken place and that “without prejudice” privilege cannot be waived.
Having worked as an office secretary on a part-time basis for a number of years, it was made clear to Ms Bailey towards the end of 2014 that the arrangement was no longer an option and she initiated discussions about a settlement agreement. A number of letters were exchanged between her solicitors (marked “without prejudice”) and her employer (not marked “without prejudice”), from 7 January 2015 onwards.
She resigned on 26 February and brought claims of unfair dismissal and sex discrimination. As part of her tribunal application, she referred to initiating settlement agreement discussions on 10 December 2014. Her employer did not initially object to her relying on the documents and indeed used the same material in support of their own case. However, they later argued that the material was privileged; or alternatively that it had been rendered inadmissible by virtue of section 111A of the Employment Rights Act.
Section 111A states that evidence of any pre-termination negotiations is inadmissible in unfair dismissal proceedings. Section 111A(2) states that pre-termination negotiations include “any offer made or discussions held” before the termination of employment with a view to terminating it on agreed terms. Section 111A(4) allows for an exception in the case of “improper behaviour” with regard to anything “said or done” by either of the parties.
The tribunal concluded that the documents were not rendered inadmissible by section 111A as it only applied to the claim of unfair dismissal and not to the sex discrimination claim. In any event, the legislation only related “to the details of any offers made or discussions held, and not to the simple fact of there having been such offers or discussions”. In relation to the “without prejudice” rule, the tribunal held that this only applied to the offer itself but not the correspondence setting out a party’s position as part of the negotiations.
The EAT held that the tribunal had failed to deal with the question as to whether FFT had waived its “without prejudice” privilege, and considered the matter itself. Given that the firm had expressly referenced and relied on the material, the EAT concluded that it had unequivocally waived any “without prejudice” privilege relating to the discussions between Ms Bailey and her employer from 7 January 2015.
It also held that the tribunal had wrongly conflated the approach to section 111A with that of “without prejudice” privilege. Section 111A had to be read on its own terms, which did not reflect the case law underpinning common law privilege and did not allow for waiver of privilege. As for admissibility of evidence, the EAT held that the legislation covered not just the content of the discussions, but also the fact that they had taken place. This included internal company discussions, such as between a manager reporting back to the board or between managers.
Noting that section 111A contained an exception for “improper behaviour”, thus giving a potentially broader approach to the behaviour in issue and a greater degree of flexibility, the EAT remitted this issue to the tribunal for re-consideration.