EAT considers without prejudice rule

Thursday 5th January 2023

The EAT, in Garrod v Riverstone Management Ltd, upheld an ET decision that an employee’s grievance constituted an “existing dispute” for the purposes of the “without prejudice” rule and therefore a settlement offer made at a meeting about the grievance was privileged.

Mrs Garrod worked for RM Ltd as Company Secretary. She raised a grievance alleging discrimination, bullying and harassment. Mrs Garrod met with RM Ltd’s external HR adviser to discuss her grievance. After discussing the main allegation, that her duties were changed when she returned from maternity leave, the adviser said he would like to have a “without prejudice” conversation. He described this as an initial exploratory conversation about a possible settlement with a severance payment of £80,000, referring to the employment relationship as “fractured” and “problematic”. No agreement was reached at the meeting and Mrs Garrod later brought claims of pregnancy/maternity discrimination, harassment, and constructive dismissal. Mrs Garrod sought to rely on references to this meeting in her particulars of claim, but RM Ltd objected, claiming “without prejudice” privilege.

At a preliminary hearing, the employment judge was satisfied that there was an existing dispute at the time of the meeting and that the parties had or might reasonably have contemplated litigation would follow if there was no settlement. It was noted that Mrs Garrod referred in her grievance to using ACAS mediation or the Early Conciliation process if the matter could not be resolved. The “unambiguous impropriety exception” was deemed not to apply, as the adviser’s behaviour was considered to have been polite and professional throughout.

Mrs Garrod appealed to the EAT, arguing pursuant to BNP Paribas v Mezzoterro, that the existence of a dispute is not proved purely by the fact that a grievance has been raised. Additionally, she considered that RM Ltd had tried to use the without prejudice rule to push her out of her role for discriminatory reasons, effectively telling her she had no future with RM Ltd and that this was “unambiguously improper”.

The EAT dismissed the appeal, considering that the employment judge was entitled to conclude that the dispute which formed the basis of the ET claims already existed at the time of the grievance meeting. Unlike in Mezzoterro, Mrs Garrod’s claims were not to any significant extent based on events which occurred at the without prejudice meeting itself.

Additionally, the EAT agreed that an allegation of discriminatory motives in making the settlement proposal did not meet the standard required for "unambiguous impropriety" exception, which only applies in "the very clearest of cases" or “in truly exceptional and needy circumstances”. In Mezzoterro the alleged unlawful conduct relating to a victimisation claim was said to have occurred at the without prejudice meeting and therefore the claim could not proceed unless the evidence was admitted. Here, the adviser’s behaviour was not considered improper and therefore the exception did not apply.

All information in this update is intended for general guidance only and is not intended to be comprehensive, or to provide legal advice.