Gallop v Newport City Council

Unsuccessful compromise-agreement negotiations are privileged. An Employment Tribunal must not enquire into them, or admit evidence about them, unless both parties have clearly and unequivocally waived privilege. A compensation assessment based on such evidence is erroneous and must be set aside.

An award for earnings lost from the effective date of termination cannot also include notice pay for the same period. That would give double recovery. An employer may permissibly rely on repeated occupational-health advice that an employee was not disabled when determining whether it had actual or constructive knowledge of disability.

The claimant was summarily dismissed after failed attempts to negotiate a compromise agreement. The Employment Tribunal held the dismissal unfair, but dismissed claims for direct disability discrimination and failure to make reasonable adjustments because the respondent lacked actual or constructive knowledge of disability.

In assessing unfair-dismissal compensation, the Tribunal reduced several heads of loss by 50 per cent for the chance that a compromise agreement would have been concluded. It also awarded loss of earnings from the effective date of termination and a further 11 weeks’ notice pay from that date.

The claimant appealed the reduction and dismissal of his disability claims. The respondent cross-appealed on the asserted double recovery. Following answers obtained under the Burns/Barke procedure, the central issues were privilege, overlapping compensation, and the respondent’s knowledge of disability.

1. The claimant’s remedy appeal and the respondent’s cross-appeal were allowed; the claimant’s disability-discrimination appeal was dismissed. The total unfair-dismissal award was varied to £60,060.82.

2. Section 203 of the Employment Rights Act 1996 provides the statutory framework for a valid compromise agreement. Where negotiations do not produce an agreement, they are privileged. The Tribunal had admitted evidence of the negotiations only because a lay member asked about them. Neither party had clearly waived privilege, and the unrepresented claimant had received no advice about it. The Tribunal should have stopped the enquiry and could not reduce compensation by reference to a supposed 50 per cent prospect of settlement. The court applied the guidance in Brennan v Sunderland City Council [2009] ICR 479.

3. The compromise-agreement head of loss was removed. However, the respondent’s cross-appeal succeeded because loss of earnings from 23 May 2008 already covered the same 11-week period as the notice-pay award. The claimant was entitled to one recovery for that period, not both.

4. The disability-related discrimination claim had not been pursued below and could not be raised for the first time on appeal, applying East Hertfordshire NHS Trust v Mensah [1998] IRLR 531. The Tribunal’s finding that the respondent lacked the necessary knowledge of disability was permissible. It was entitled to rely on repeated occupational-health advice that the claimant was not disabled. Knowledge imputed through that service was accordingly knowledge that he was not disabled. A later concession, based on subsequent medical evidence, did not preclude the respondent from contesting knowledge at the substantive hearing. The direct-discrimination and reasonable-adjustments claims therefore failed.

• Employment Appeal Tribunal: The claimant’s appeal concerning unfair-dismissal remedy and the respondent’s cross-appeal succeeded. The claimant’s appeal against dismissal of the disability claims was dismissed.

• Employment Tribunal: Cardiff Employment Tribunal, chaired by Employment Judge Beard, held the dismissal unfair but dismissed the direct-discrimination and reasonable-adjustments claims. Its reasons were promulgated on 14 September 2010.