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Existing grievance was an existing dispute that engaged “without prejudice” rule

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In the case of Garrod v Riverstone Management Ltd the EAT held that the employee’s grievance was an “existing dispute” that engaged the “without prejudice” rule. This decision provides a useful opportunity to analyse when employers can rely on a settlement conversation being protected.

“Without prejudice” privilege arises where there is an “existing dispute” and where the parties to that dispute choose to enter into discussions in a genuine attempt to settle that existing dispute, but wish to protect those exchanges from disclosure in any future court or Tribunal proceedings. In general, the prerequisite that there must be an existing dispute will be met where an employee has brought a claim or might reasonably contemplate bringing a claim – and this could be at a point when an employee brings a grievance. However, the distinction is not always clear-cut.

There are limited exceptions to the without prejudice rule, including in clear cases of perjury, blackmail, or other unambiguous impropriety, but there is no specific exception to the without prejudice rule in discrimination cases.

To allow for limited settlement conversations even where there was no pre-existing dispute, in 2013 Parliament legislated to introduce “protected conversations” in which pre-termination negotiations may be protected from admissibility in subsequent unfair dismissal proceedings and even if there was no existing dispute at the time of the conversation, unless there has been “improper behaviour”. There is a specific exception to this rule for discrimination cases – in cases where there may be allegations of discrimination, employers should still rely on the without prejudice rule.

In Garrod v Riverstone Management Ltd, Ms Garrod submitted a grievance raising allegations of pregnancy and maternity discrimination, bullying and harassment. Her employer held a meeting with her during which her grievance was discussed but at the end of the meeting they said they would like to have a “without prejudice” conversation. They assumed that Ms Garrod understood what this meant and described it as an initial exploratory conversation about settlement. They described the employment relationship as ‘fractured’ and ‘problematic’ and offered her a severance payment. No agreement was reached at the meeting.

The employer went on to reject the grievance and Ms Garrod resigned. She brought claims of pregnancy and maternity discrimination, harassment, and unfair constructive dismissal. In her claim she referred to the meeting where the “without prejudice” offer was made and to the contents of that conversation. The employer argued that the conversation should be excluded from evidence on the ground of “without prejudice” privilege.

A preliminary hearing was held on the issue and the Employment Tribunal judge found in favour of the employer.

Ms Garrod appealed to the EAT, relying on the 2004 case of BNP Paribas v Mezzoterro, which held that the existence of a dispute is not proven purely by the fact that the employee has raised a grievance. She also argued that the attempt to rely on the without prejudice rule was a cloak for unambiguous impropriety, as her employer had tried to push her out of her job for discriminatory reasons.

The EAT dismissed Ms Garrod’s appeal. The without prejudice rule applied to the settlement offer made at the meeting on the basis that there was an existing dispute and that the parties contemplated or might reasonably have contemplated that litigation would follow if there was no settlement. It held that the case of Mezzoterro was not authority for the suggestion that a grievance can never amount to an existing dispute, and that it was decided on its own facts. In relation to unambiguous impropriety, the employer’s behaviour was not anything other than polite and professional and the without prejudice rule will be disapplied only in ‘the very clearest of cases’ or ‘in truly exceptional and needy circumstances’. Further, the EAT noted that Mezzoterro itself was an unusual case in which the allegedly unlawful conduct on which the Tribunal proceedings were based, was said to have occurred at the allegedly privileged meeting and that if the relevant evidence could not be admitted, then the claim could not be pursued. This was not the case for Ms Garrod.

This case will provide some comfort to employers wishing to initiate settlement discussions once an employee has raised a grievance. However, employers should carefully assess whether there is an existing dispute before relying on without prejudice privilege; and / or alternatively, assess whether the criteria are met to enable them to hold any discussions as a protected conversation.

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