In another important House of Lords (HL) decision, this time overturning the Court of Appeal, the HL held that the Council had subjected a group of catering staff claiming equal pay to unlawful victimisation when it wrote to them warning that if they persisted with their claims, the Council would be forced to consider redundancies and might be unable to offer paid school meals. The case raised interesting issues about the balance which must be struck between the respondent's legitimate desire to achieve a settlement on the one hand with the potential detrimental treatment suffered by the claimants as a response to bringing proceedings on the other hand.

The previous test had focused on whether the conduct complained of fell within the description of an "honest and reasonable" attempt to compromise the proceedings. The HL considered that the letters were carefully written, the tone was rational and they contained much that was sensible. However, the focus cannot be solely on whether the actions of the employer were honest and reasonable. The statutory reference to detriment is fundamental. The employer should avoid doing anything that might make a reasonable employee feel that they are being unduly pressurised to concede their claim. Treatment will only amount to a detriment if a reasonable employee might regard it as detrimental. The question of whether the borderline has been crossed is a question of fact for the tribunal. In this case, the HL held that the letter was effectively a threat and the Council had gone beyond what was reasonable in protecting its interests in the existing litigation.

Practical advice for employers when seeking to settle – employers should be able to take steps to negotiate settlements or point out the possible consequences of a claim succeeding. However, the employer's actions must not cause the claimant to suffer a detriment which would seriously jeopardise their right to pursue a claim. Here, the Council was criticised for its direct approach to the claimants rather than pursuing the matter through legal advisers. Consider carefully the implications of writing to employees who are involved in discrimination proceedings as warning about the commercial consequences of successful litigation, even where given in a rational and sensible manner reflecting the genuine concerns of the company, could constitute unlawful victimisation.

Employers should also be extremely careful about raising these types of issues in the context of without prejudice discussions, traditionally a forum for communicating openly with the other party to a dispute with matters being privileged from disclosure to the court of tribunal. Matters discussed on a "without prejudice basis" could be disclosable if, for example, the complainant is able to demonstrate that there was, in fact, no "dispute" between the parties or if the "unambiguous impropriety" exception to the without prejudice rule applies in the context of a genuine and legitimate complaint of sex discrimination or victimisation ie where the party would be seriously disadvantaged if they could not refer to the matters discussed (see BNP Paribas v Mezzoterro [2004] IRLR 508 and Brunel University v Vaseghi and Webster ( we have just heard this morning that the EAT decision was upheld by the Court of Appeal [2007] EWCA Civ 482) – so care should be taken.