In the recent case of Faithorn Farrell Timms v Bailey, the EAT considered the differences between the protection offered by “without prejudice” privilege and protected conversations in pre-termination negotiations. It provides the first appeal decision in respect of protected conversations, which were introduced as section 111A of the Employment Rights Act 1996 in 2013.

Mrs Bailey initiated settlement discussions with her employer after issues arose in respect of her part-time working arrangements. By January 2015, shortly after settlement discussions began, the parties were said to be “in dispute” and the employee raised an internal grievance which was not upheld.

In May 2015, she issued tribunal proceedings claiming constructive unfair dismissal and sex discrimination. Both parties referred to the pre-termination negotiations and without prejudice correspondence in their particulars before the Tribunal. At a Preliminary Hearing, a question of admissibility was raised in respect of some of the without prejudice and protected conversation documentation and the Employment Tribunal concluded that this documentation was not rendered wholly inadmissible by virtue of section 111A or under the without prejudice rule.

On appeal, the EAT made some key findings about the differences between the two methods of trying to settle.

Even the mere fact of a protected conversation having taken place, rather than just the terms of the offer, is inadmissible in unfair dismissal claims. This also extends to any internal discussion referring to pre-termination negotiations within the employer company. Moreover, parties cannot agree to waive the protection. The only exception to this is if there is “improper behaviour” on the part of the employer; a concept which the EAT clarified was wider than the “unambiguous impropriety” exception to without prejudice privilege.

This position is distinct from without prejudice privilege which can be waived if there is unequivocal waiver with consent from both parties and also in some other exceptional circumstances. However, employers should take care when referring to without prejudice material in particulars and responding to claims to avoid inadvertent waiver.

Furthermore, protection under section 111A applies only to unfair dismissal claims. Where there are parallel claims, the material can be admitted in respect of a (for example) discrimination claim, but will not be admissible in respect of the unfair dismissal claim.

Overall, employers should view this decision as an opportunity, not a hindrance. It shows that, although the nuances of privilege may be reasonably complex, understanding them can bring distinct tactical advantages to employers when dealing with employees in different situations.

The ability to make offers with this confidence opens up the possibility of more early offers and more potential disputes settling before employers have to spend time and money on the litigation process. Having said this, it is still sensible for employers, when conducting protected conversations, to handle them in a non-threatening and professional manner, so as to minimise the risk that there is improper behaviour.

However, there are downsides. An employer may have to maintain parallel ‘on the record’ discussions if the negotiations become prolonged so that their position in any future tribunal claim is not prejudiced. Furthermore, if there are issues such as discrimination, and an employer wishes to take advantage of the cloak of privilege, then they would have to wait until a dispute arises to avail of the protection.