‘Without prejudice’ correspondence or conversations, which take place in a genuine attempt to settle a dispute, cannot then be used as evidence in subsequent legal proceedings.
There are a few exceptions, including that the without prejudice rules should not be allowed to hide any clear cases of ‘unambiguous impropriety’, such as blackmail or perjury (lying under oath). Unambiguity is the key - the situation must be clear cut. As such, the without prejudice label will only be lifted very rarely.
In Swiss re Corporate Solutions v Sommer, the employee was a risk underwriter who was placed at risk of redundancy shortly after returning from maternity leave. She raised grievances to which she attached company and client information in support of her complaints. She openly copied these grievance emails to personal email address and copied her husband into one of them. Her grievances were not upheld. HR wrote to her about copying the information to herself and her husband, saying it was a low-level data breach and asking her to delete the material, which she did. She issued tribunal claims.
The company said it was going to investigate the data breaches. The employer then sent a without prejudice letter. It said the employee had breached contractual confidentiality obligations, committed a criminal data protection offence, and said her conduct could lead to dismissal, criminal convictions, fines and regulatory findings that would make it difficult for her to work in her regulated sector. The letter contained an offer of £37,000 to terminate employment and settle all claims. A few days later, the investigation concluded that there were strong mitigating factors relevant to the employee’s conduct in emailing information to herself and informal action only was recommended. The employee was dismissed a couple of months later and said she wanted to use the without prejudice letter in evidence in tribunal proceedings as it constituted ‘unambiguous impropriety’.
The employment tribunal agreed. They said the letter contained improper threats and pressure, and grossly exaggerated the situation, to persuade the employee to accept the settlement. The employer appealed. The EAT allowed the appeal and said the letter could not be used as evidence. The EAT said baseless allegations could be unambiguous impropriety if there was evidence of dishonesty.
But the tribunal had not engaged with the potential merits of the employer’s allegations in the without prejudice letter. Although they may have been right to say the allegations were grossly exaggerated, they didn’t deal with the fact that the facts arguably showed data protection and other breaches. The EAT said exaggeration would not usually pass the unambiguous impropriety test without findings on the employer’s state of mind, which the tribunal did not do, and could not have done (according to the EAT) without oral evidence on the issue. Although the letter ‘sailed close to the wind’, public policy meant that, in this case, exaggeration was not enough.
Despite the marked difference in tone between the open ‘low level’ breach allegations from HR and the ‘exaggerated’ allegations in the without prejudice letter, the EAT decided the employee in this case could not use the without prejudice letter as evidence in her future tribunal proceedings. This case is good news for employers and the sanctity of without prejudice discussions which are so vital to employers in avoiding expensive and time-consuming litigation.
But this judgment shows that exaggeration can cause problems, and in some cases may result in the without prejudice veneer coming off. Employers should ensure that without prejudice offers and negotiations do not overegg the pudding. A genuine without prejudice offer should not need any exaggeration.