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Without Prejudice – what is it and can I get around it?

Jun 7, 2022

The use of the words “without prejudice” are often misunderstood. Far too often, in the world of employment letters and emails do we see both employers and employees trying to use the words “without prejudice” to give themselves some form of authority or advantage. When in reality, the language only applies to genuine attempts to settle existing employment disputes. In this article, we look at this issue as well as a recent case on the limits that apply to allowing without prejudice into formal legal proceedings.

In the case of Swiss Re Corporate Solutions Ltd v Sommer, the Employment Appeal Tribunal held that an Employment Judge was wrong when holding that a without prejudice letter could be admitted into evidence under the “unambiguous impropriety” exception to the without prejudice rule. We look at this further, below.

What is the without prejudice rule?

To start, what is it and how does it work? The without prejudice rule applies in an employment context where there is an existing dispute between the employee and employer. It cannot be used for any old letter or email and, instead, must follow an existing claim or complaint. This is different to a “protected” conversation that can be used without there being an existing dispute but is only applicable in particular types of claims.

The without prejudice rule prevents any oral or written statements made in a genuine attempt to settle an existing dispute from being put before a Tribunal, as evidence of admissions against the interest of the party that made them. The rationale behind the without prejudice rule is that parties are more likely to engage in discussions to settle their dispute, knowing that what they have said and, in particular, any admissions or offer made to try to settle the matter, cannot be used against them in the event the settlement discussions fail.

What are the exceptions?

There are, however, several exceptions to the without prejudice rule. One of the exceptions is that the without prejudice rule should not act as a cloak for perjury, blackmail or other unambiguous impropriety.

The test for the admissibility of without prejudice statements based on the “unambiguous impropriety” exception to without prejudice privilege, is not whether there is a “good arguable case” that there has been unambiguous impropriety, but rather simply whether the evidence establishes unambiguous impropriety. Historically, cases in which the unambiguous impropriety exception has successfully been applied have been “truly exceptional”.

Swiss Re Corporate Solutions Ltd v Sommer [2022]

Turning now to the recent case of Swiss Re Corporate Solutions Ltd v Sommer

Facts

Mrs Sommer was employed as a political risk underwriter by Swiss. Mrs Sommer returned to work from maternity leave in July 2020, and in October 2020 was informed that her role was at risk of redundancy. Mrs Sommer raised several grievances by email which she openly copied to her personal email address and her husband’s personal email address. The grievances were not upheld. Swiss informed Mrs Sommer that the emails she had copied to her personal email address and to her husband, included personal data and matters confidential to Swiss and its clients and therefore amounted to a low-level data breach.

On 22 January 2021, Mrs Sommer issued her first set of Tribunal claims against Swiss. On the same day, Swiss’ solicitors sent a without prejudice letter, which proposed termination of employment and payment of compensation while setting out a number of allegations against Mrs Sommer. The without prejudice letter stated that her conduct could result in summary dismissal, criminal convictions and fines and FCA findings which could make it difficult for her to work again in the regulated sector. The letter concluded by offering a settlement agreement under which her employment would terminate and she would receive £37,000.

In April 2021, Mrs Sommer was dismissed on grounds of redundancy on 16 April 2021. She issued further Tribunal claims against Swiss on 28 April 2021. At a preliminary hearing, Mrs Sommer argued that the WP letter should be admitted into evidence because it constituted “unambiguous impropriety”.

Employment Judge

The Employment Judge held that the without prejudice letter should be admitted into evidence, because it contained “improper threats and pressure” to persuade Mrs Sommer to accept the settlement and constituted an abuse of without prejudice privilege. Swiss appealed on the basis that either the Employment Judge had misdirected herself on the law in relation to unambiguous impropriety, or the Employment Judge’s finding that there was “no basis at all” for the assertions made in the without prejudice letter was unsupported by or inconsistent with the evidence and/or was perverse.

Employment Appeal Tribunal

The Appeal was allowed and the Employment Appeal Tribunal held that the only possible outcome was that the without prejudice letter was inadmissible in evidence at the full hearing of Mrs Sommer’s claims. The Employment Appeal Tribunal found that that the Employment Judge had failed to engage with the arguable merits of the allegations made in the without prejudice letter. The reference by the Employment Judge to allegations of serious misconduct having “no basis at all” was an error.

Decision

The decision by the Employment Appeal Tribunal re-emphasises the principles around the without prejudice rule and how parties, engaged in an existing dispute, should be able to use it without fear of what they say being used in Court. It also recognises that the “unambiguous impropriety” exception should only be applied “in the clearest cases of abuse of a privileged occasion”.

In practice, the decision raises questions of when exaggeration will overcome the high bar for a without prejudice letter to lose the protection of privilege, and how that will be established. For employers seeking to send without prejudice communications to an employee, it is important that legal advice is taken when drafting to prevent any risk of a finding of unambiguous impropriety.

For further information or to discuss the issues raised by this update, please contact our Employment Group on 01276 854663 or employment@herrington-carmichael.com.

This reflects the law at the date of publication and is written as a general guide. It does not contain definitive legal advice, which should be sought as appropriate in relation to a particular matter.

 

Alistair McArthur

Alistair McArthur

Partner, Head of Employment Law

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