Without Prejudice and ‘Confidential Conversation’ communications explained

Some HR professionals may just have caught up with the recent decision of Her Honour Judge Eady QC in Faithorn Farrell Timms LLP v. S Bailey. However, given the political landscape over the last few weeks it would not be a surprise if this important case had fallen off the radar. For those who missed it, a detailed summary is set out at the foot of this article. Extracting, however, the key learning points these are as follows:-

1. No matter how ‘academic’ it may seem to the busy professional, it is worth being clear in your own mind whether communications are under Section 111A ERA or under the ‘without prejudice’ rule. It is easy to envisage a situation like this case where both are happening at the same time. Much hangs on this. For example, privilege can be waived as the case shows. However under Section 111A there is a blanket ban on disclosure subject to its own specific exceptions. Section 111A restricts reference to the fact of discussions having taken place and not just the content.

2. There is now support for arguing that confidential conversations on Section 111A extend to all internal members of the employer involved, so that, for example, their emails and meeting notes would not be relevant material before the Tribunal. This also serves as a useful reminder to all HR professionals about the limited ‘cloak’ relating to internal records where Section 111A is not involved.

3. The case highlights the importance of taking immediate steps if material is put before the Tribunal which should not be. Here the employee referred to without prejudice material in her original ET complaint and the employer did not object. Indeed the employer referred to without prejudice material in its response. This proved fatal as privilege was thereby waived.

4. The decision reinforces a potential trap under Section 111A. Confidentiality is restricted to cases involving unfair dismissal. It does not apply to discrimination. The consequence is that material can be barred under one claim and not under the other.

5. The consequences of the Judgment and the fact of confidential conversations not forming any part of the chronology which can be referred to, means that professionals will need to keep an eye on the communications that can be subsequently referred to in a Tribunal. Whilst negotiations are underway HR will need to keep an eye on what is happening on a ‘open’ or ‘visible’ basis as far as any subsequent Tribunal is concerned.

6. The self-contained code of Section 111A means that parties cannot choose to refer subsequently to what happened even if they both agree! This very restrictive approach is tempered by the ability of the employee to disclose information where there has been ‘improper behaviour’. Although even then the ET still has to decide if improper behaviour should in the circumstances lead to the confidential information being considered.

7. Beware over lengthy negotiations and documents. Even under Section 111A provisions material could ultimately be considered to be ‘out of scope’.

Decision Summary

• The employee, an office secretary in a surveyor’s firm initiated settlement discussions on an exit package. Subsequently her solicitors entered into negotiations. Letters were exchanged. Solicitors letters headed ‘without prejudice’ was sent to the employers. The employer’s letters were not marked ‘without prejudice’. The employee raised a grievance and referred to a lot of the settlement discussions and without prejudice material. The employer did not object and referred to the material in the outcome. The employee resigned; claimed constructive dismissal and sex discrimination. In her ET she referred to the material. The Respondent did not object and also referred to some of the material in its Response.

• Later, at case management stage, the Respondent objected to some of the material being relied on. There was an appeal and cross-appeal to the EAT. Some important principles were decided.

• Issues relating to Section 111A ERA are quite separate from the ordinary case law rules which have grown up concerning other types of negotiations on the ‘without prejudice’ rule. So it is important to analyse whether a communication is made under Section 111A ERA or not.

• Some of the consequences are as follows:-

• That ‘privilege can be waived’ in without prejudice communications whereas Section 111A Confidentiality cannot be waived even if the parties agree;

• The effect of case law where matters are covered by privilege mean that the employer can resist an argument of waiver where without prejudice material is referred to in an internal process;

• The confidentiality rule in Section 111A extends only to unfair dismissals and not to e.g. discrimination. In a dual claim material can therefore be excluded in one claim and not in the other;

• The blanket confidentiality of Section 111A means that the fact of the discussions as well as the content are confidential and inadmissible, even if one or both parties want to explain an apparent gap in the chronology;

• Whereas under the without prejudice rule internal documents created might be disclosable and admissible, in contrast under Section 111A it seems that an internal team can resist reliance on documents they have created in the context of the statutory confidential discussions;

• Different tests apply to when an ET can go behind the different types of confidentiality. Under Section 111A the issue is ‘improper behaviour’ a broad concept.

On balance the case provides some overdue and welcome clarity on the different processes. The case also identifies the extent of the traps for the unwary.

For further information please contact Holly Dobson on 0114 224 2121 or at [email protected]