In the case of Faithorn Farrell Timms LLP v Bailey, the EAT has ruled that the privilege afforded to protected conversations under S.111A Employment Rights Act 1996 cannot be waived by agreement in unfair dismissal claims. On that basis, conversations are protected unless there has been ‘improper behaviour’.
Mrs Bailey was employed as a secretary until she resigned in February 2015. Prior to this, she had initiated discussions regarding a settlement agreement with her employer. In January 2015, she and her employer exchanged ‘without prejudice’ correspondence regarding the settlement terms.
Shortly afterwards, she sent a letter raising a grievance referring to the earlier discussions in open correspondence. The employer’s response was ‘without prejudice’. She made clear that she did not accept that these discussions were ‘without prejudice’ and when she brought her claim, her ET1 Form referred to the discussions. The employer did not object to this and also referred to the discussions in their response.
The Tribunal raised the issue of admissibility. The Tribunal considered privilege under the common law ‘without prejudice’ rules and under S.111A. Regarding the common law, the Tribunal ruled that details of offers made under settlement agreements were privileged but that correspondence discussing the parties’ positions was not. The Tribunal also found that under S.111A only details of any ‘settlement offer made or discussions held’ were covered.
The employer appealed arguing that S.111A and the common law rule had been interpreted too narrowly. Mrs Bailey cross-appealed arguing that any privilege had been waived by her employer failing to complain about the reference to the discussions in her ET1 Form.
Appeal to EAT
The EAT partially upheld the appeal. It found that the Tribunal had erred in its interpretation of S.111A. The EAT found that the simple fact that there had been offers or discussions was also privileged and held that relevant internal discussions between managers and HR would also be inadmissible in unfair dismissal claims.
The cross-appeal succeeded in part. Under the common law, the employer waived privilege by failing to complain that the ET1 had referred to the discussion and by referring to the discussions in their own response. However, the EAT held that privilege could not be waived under S.111A; parliament had not intended the common law rules to apply.
The EAT recognised that privilege can be dis-applied under S.111A where there has been ‘improper behaviour’. This gives the Tribunal wider discretion to disapply privilege than that awarded by the common law, which requires ‘unambitious impropriety’, for privilege to be dis-applied. The EAT has remitted the case back to the Tribunal to re-consider this point on the facts of the case.
The ruling is the first appellate judgment dealing with the scope of ‘protected conversations’ under S.111A. Whilst the ruling is positive for employers in broadening the range of inadmissible discussions, it also highlights a number of points for employers to be aware of:
The circumstances in which privilege can be dis-applied are wider in scope under S.111A than in common law. Therefore, employers must be particularly wary of making discriminatory comments or exerting pressure on employees to accept settlement offers which could be interpreted as ‘improper behaviour’ in unfair dismissal claims. Employers should keep comprehensive notes of all discussions to enable them to defend allegations of ‘improper behaviour’.
Whilst privilege cannot be waived under S.111A, it remains important for employers to take practical steps to make clear their intention for settlement correspondence and discussions to be privileged by clearly stating that all meetings and correspondence are ‘confidential and without prejudice’.
For further information, please contact a member of the Employment Team.