The Court of Appeal recently decided that legal advice given to HR on dismissing an employee for redundancy was not a "cloak" for a discriminatory dismissal
Legal advice privilege applies to confidential communications which pass between a client and their lawyer, where they have come into existence for the purpose of giving or receiving legal advice about what should prudently and sensibly be done in the relevant legal context. However, for public policy reasons, privilege can be lost where a communication or document comes into existence for the purpose of furthering a criminal or fraudulent act - known as the "iniquity principle".
Mr Curless was a senior lawyer at Shell and had brought a tribunal claim alleging disability discrimination. Subsequently, following an extensive redundancy programme, he was made redundant. He then brought a second claim, alleging that his dismissal for redundancy was a sham and the reason for his dismissal was that he had brought a claim against the company – relying on an email between lawyers at the company which he had been sent anonymously, and an overheard conversation in a pub. Shell applied to strike out those parts of the claim on the basis that they referred to privileged material.
The EAT took a dim view of the email advice and decided that privilege did not apply to it, or the overheard conversation, on the basis that the advice was an attempt to deceive Mr Curless and the courts by dressing up a discriminatory dismissal as a redundancy dismissal. This decision caused concern as it potentially narrowed the scope of privilege.
However, the Court of Appeal disagreed with the EAT. It concluded that there was no dispute that Shell was engaged in a redundancy process, and the advice was simply about whether and how the redundancy process could be applied to Mr Curless "with appropriate safeguards and in the right circumstances". The Court said it was “the sort of advice which employment lawyers give ‘day in, day out’ in cases where an employer wishes to consider for redundancy an employee who (rightly or wrongly) is regarded by the employer as underperforming”. And there was nothing to suggest it would have been anything other than conventional advice. The Court also said that the overheard conversation could not be used as an aid to interpreting the email.
As neither the advice nor the conversation was found to be underhand and iniquitous, they remain privileged and, subject to an appeal, Mr Curless cannot rely on them in court.
What does this mean for employers?
Given the Court of Appeal’s decision that the email advice was not underhand or iniquitous, the scope of the iniquity principle did not have to be decided in this case, so this issue has not been clarified by the court. That said, this decision will give some comfort to employers as it confirms that the threshold for waiving legal advice privilege is high and will only be allowed in exceptional circumstances. For the iniquity exception to apply, it must be shown that the privileged material came into existence in the pursuit of an unlawful scheme.
This case was unusual in that the legal advice was leaked. Confidentiality is a key feature of privilege, and employers should take steps to ensure that confidentiality is maintained. So it's important to restrict the number of people the advice is shared with - the wider it is known and the more it is discussed, the less likely it is that it will remain privileged.