Graham v. Agilitas IT Solutions Ltd

Section 111A of the Employment Rights Act 1996 operates alongside, rather than replaces, the common law without prejudice rule. Pre-termination negotiations may be protected even though no dispute pre-dates them, provided they are held with a view to an agreed termination. Discussions about an alternative role may remain within the section where agreed termination remains a known option.

Common law privilege requires a dispute, or a potential dispute in which litigation is reasonably contemplated if agreement fails. The label “without prejudice” is relevant but not decisive. A party cannot selectively rely in disciplinary proceedings on part of a privileged conversation while asserting privilege over the remainder; the tribunal must determine whether that conduct waived privilege or was improper under section 111A(4).

The Claimant, a Sales Director and shareholder, was summarily dismissed after disciplinary proceedings. Before dismissal, he and the Respondent’s chief executive held a series of meetings described as without prejudice. The Respondent later relied on words said by the Claimant at the first meeting as a disciplinary allegation.

At a preliminary hearing, the Employment Tribunal ruled that the conversations were inadmissible under section 111A of the Employment Rights Act 1996 and under the common law without prejudice rule. It ordered the relevant passages to be removed from the claim form.

The Claimant appealed. The central issues were whether the meetings were protected negotiations and whether the Respondent’s reliance on part of the first meeting waived privilege or amounted to improper behaviour.

1. Appeal allowed in part. The Employment Tribunal was entitled to find that all the relevant meetings were pre-termination negotiations within section 111A(1) of the Employment Rights Act 1996. A pre-existing dispute is not a statutory condition. The Tribunal’s findings showed that termination by agreement remained an option throughout the discussions, including those centred on an alternative role. The Employment Judge had not conflated the statutory test with the common law rule.
2. The Tribunal was also entitled to find that the meetings were protected at common law. Performance concerns, possible disciplinary action and dismissal, and the convening of a meeting about the Claimant’s future on an agreed without prejudice basis established at least a potential dispute in which litigation was reasonably contemplated if agreement failed. The words “without prejudice” were not treated as conclusive; the Tribunal had relied on the surrounding facts and the parties’ genuine efforts to resolve the position.
3. However, the Tribunal gave no reasons for rejecting the Claimant’s contention that the Respondent had waived without prejudice privilege by relying, as a disciplinary allegation, on words spoken by him during the 12 August 2015 meeting. The Respondent could not cherry-pick parts of that single conversation as unprivileged while maintaining privilege over other parts. The issue required findings and reasoned determination.
4. The Claimant was exceptionally permitted to advance the associated new argument under section 111A(4). Since the same conduct had to be investigated on the remitted waiver issue, it would be unjust to prevent him from contending that selectively relying on the conversation was improper behaviour.
5. The matter was remitted to the same Employment Tribunal to determine whether the Respondent waived privilege in respect of the 12 August meeting and/or acted improperly within section 111A(4). The appeal succeeded only to that extent.

• Employment Appeal Tribunal: allowed the appeal only on the waiver issue and the linked section 111A(4) issue, and remitted them to the same Tribunal.
• Employment Tribunal: at a preliminary hearing, with reasons promulgated on 26 June 2017, held the relevant conversations inadmissible under section 111A of the Employment Rights Act 1996 and the common law without prejudice rule.