Faithorn Farrell Timms LLP v Bailey

Common-law without prejudice privilege and the statutory protection in section 111A of the Employment Rights Act 1996 are distinct regimes. Without prejudice privilege requires an extant dispute and genuine settlement negotiations, and may be waived by unequivocal conduct, including implicit agreement. Section 111A applies to evidence of the fact as well as the content of qualifying pre-termination offers or discussions. It can apply to internal communications reporting those discussions and is confined to unfair-dismissal proceedings, although the same evidence may remain admissible for another claim.

Section 111A must be construed independently of common-law privilege. Its confidentiality cannot be waived. Improper behaviour is a separate, fact-sensitive issue for the employment tribunal.

The claimant brought proceedings alleging constructive unfair dismissal and indirect sex discrimination. The claims arose partly from discussions concerning the possible termination of her employment. She referred openly to correspondence that had initially been treated as without prejudice, and the respondent later referred to and relied on some of the same material in its response.

The Employment Tribunal ruled, on written submissions, that the material was generally admissible, subject to redaction of specific references to an offer. It did not determine whether there had been unambiguous impropriety or improper behaviour, or whether privilege had been waived. The respondent appealed and the claimant cross-appealed.

The central issues were the scope and waiver of common-law without prejudice privilege, and the construction and application of section 111A of the Employment Rights Act 1996.

1. Without prejudice privilege. The Employment Tribunal had correctly treated admissibility of alleged without prejudice negotiations as a case-management matter and had made no error of law. The privilege applies only where there is a dispute and communications amount to a genuine effort to resolve it. The label is not decisive, and the protection should extend no further than necessary. Whether correspondence forms part of negotiations is primarily for the tribunal.
2. The tribunal had failed to address the claimant’s arguments concerning genuine negotiation and unambiguous impropriety. Those matters required factual findings and would have justified remission. More importantly, the respondent had implicitly waived common-law privilege by referring to and relying on the material in its ET3. Mere reference to negotiations during an internal grievance would not ordinarily waive privilege, following Brunel University v Vaseghi, but the parties’ subsequent conduct in the litigation demonstrated agreement to waive it.
3. Section 111A. The provision must be read on its own terms rather than through the case law on common-law privilege. It renders inadmissible evidence of qualifying pre-termination offers or discussions, including evidence of the fact of those discussions, not merely their content. The protection may extend to internal communications about the negotiations where the subject matter is properly characterised as evidence of the offer or discussions.
4. Section 111A applies only to proceedings on an unfair-dismissal complaint. Evidence may therefore be admitted for a discrimination claim while remaining inadmissible for the unfair-dismissal claim. The statutory protection continues after a dispute arises.
5. The Employment Tribunal had not decided whether all the documents were evidence of discussions held with a view to termination on agreed terms, or whether the respondent’s conduct amounted to improper behaviour under section 111A(4). Those questions were remitted. Section 111A confidentiality cannot be waived, having regard also to section 203 of the Employment Rights Act 1996.
6. The appeal was dismissed on the common-law issue but allowed concerning the approach to section 111A. The cross-appeal was allowed concerning improper behaviour and common-law waiver, but dismissed concerning waiver of section 111A confidentiality.

• Employment Appeal Tribunal: allowed in part the respondent’s appeal against the Employment Tribunal’s interlocutory admissibility ruling; allowed in part the claimant’s cross-appeal; remitted the section 111A issues concerning improper behaviour and the characterisation of the documents.
• Employment Tribunal: ruled that the documents were generally admissible, subject to redaction of specific references to an offer, but had not determined waiver, unambiguous impropriety or improper behaviour.