The Employment Appeal Tribunal (EAT) has recently held in Garrod v Riverstone Management Ltd that an employee’s grievance based on bullying, harassment and maternity discrimination constituted an "existing dispute" for the purpose of the "without prejudice" (WP) rule.
The WP rule generally prevents statements made in a genuine attempt to settle an existing dispute from being put before a court or tribunal as evidence. The purpose of the WP rule is to encourage settlement discussions, with the ultimate objective of minimising the number of disputes that end up in formal litigation. It gives parties the opportunity to speak and write openly about settlement, without worrying that what they are saying may be used against them.
In this case, it was found that the employer could rely on the WP rule, such that evidence of a settlement offer made at the end of a grievance investigation meeting could not be relied on in tribunal proceedings, because of the existing dispute between the parties.
Background
Mrs Garrod was employed by Riverstone Management Ltd as Company Secretary. Following a grievance submitted by Mrs Garrod (raising allegations against three senior managers for pregnancy and maternity discrimination, bullying and harassment) a meeting was held between her and the employer’s external HR and employment law adviser. There were some initial discussions about Mrs Garrod’s grievance, including who she thought was the most appropriate person to hear her grievance, what the main substantive point of the grievance was, and what Mrs Garrod wanted from the outcome of her grievance.
At the end of this meeting, she was told by the adviser that the rest of the meeting was going to be conducted on a "without prejudice" basis. The adviser assumed that Mrs Garrod knew the implications (possibly because she had a law degree and a formal post-graduate legal qualification and possibly because she was accompanied to the meeting by her husband, who had a PhD in law). Mrs Garrod did not raise any questions at this point in the meeting as to what this meant, so the adviser went on to say that he believed the employment relationship was "fractured" and "problematic". In an attempt to resolve the situation, the adviser presented a settlement offer to her. The offer was that the employer was willing to offer Mrs Garrod £80,000 to terminate her employment. The meeting concluded without any agreement on settlement being reached.
The employer subsequently rejected Mrs Garrod’s grievance. Mrs Garrod resigned and brought claims for maternity discrimination harassment and constructive unfair dismissal. In her claim, Mrs Garrod included reference to the meeting with the adviser. In response, the employer argued any reference to these conversations should have been excluded from Mrs Garrod’s claim, because of WP privilege.
The decision
The tribunal found in favour of the employer and held that the WP rule applied to the settlement offer made at the meeting.
On appeal, the EAT looked at previous case law on the question of whether there was an "existing dispute". To be able to rely on the WP rule, there needs to be a genuine attempt to settle an existing dispute, whether that dispute is written or oral. Previous case law held that simply raising a grievance with your employer does not prove the existence of a dispute, as if the grievance is subsequently upheld, there is no dispute.
The EAT concluded that in Mrs Garrod’s situation, she had made it very clear before the WP meeting that the matter was likely to be heading for litigation. In her grievance, she had complained of various unlawful acts. Accordingly, the EAT held the tribunal was entitled to find that at the time of the WP meeting, there was already an existing dispute between the parties in place. This meant the WP rule could apply to the contents of that part of the meeting.
There are narrow circumstances where the WP rule will be disapplied, despite there being an existing dispute. This includes instances where the WP material evidences "unambiguous impropriety" by either party. For example, being discriminatory during a grievance meeting (as Mrs Garrod argued the adviser had been) could count as improper behaviour. However, there was no evidence of the adviser being anything but polite and professional in this case. The EAT held that the WP rule will only be disapplied in “the very clearest of cases” or “in truly exceptional and needy circumstances”.
Mrs Garrod was ordered by the tribunal to pay costs as a result of her refusal to agree that the contents of the WP meeting were inadmissible as part of her claim. Her appeal to the EAT against that costs award was unsuccessful. This sends a robust message to claimants seeking to rely on the contents of WP meetings as admissible evidence.
Lessons learned...
This case shows that it is possible for employers to hold genuine WP discussions with employees who have brought a grievance, to seek to settle that grievance. It also demonstrates how difficult it is for parties to rely on the exceptions to the WP rule, that the other party is guilty of such "unambiguous impropriety".
This is a welcome development for employers and should also benefit the judicial system, as it will make it easier for potential claims to be settled without the need for parties to resort to formal litigation.
Andy Williams
Ella Whelan