Cake and eating it

The law states that evidence of pre-termination negotiations cannot be used in any subsequent tribunal proceedings. In Graham v Agilitas IT Solutions Ltd, the Employment Appeal Tribunal (EAT) held that an employer cannot rely on part of a protected conversation during a disciplinary hearing while at the same time arguing that the meeting was covered by without prejudice privilege.

Basic facts

Mr Graham was the company’s sales director as well as one of its shareholders. Following concerns about his performance, the CEO held a number of without prejudice conversations with him about his ongoing employment, including performance improvement and dismissal.

However, before any agreement was reached Mr Graham was suspended, pending an investigation into allegations of misconduct, namely that he had told colleagues that there was a conspiracy to remove him and that if that happened, he could damage the company financially.

At the disciplinary hearing, the company relied on comments he had made during one of the without prejudice meetings. Mr Graham was subsequently dismissed on the basis of gross misconduct or alternatively that there had been an irretrievable breakdown in the necessary mutual relationship of trust and confidence.

Mr Graham brought claims of ordinary unfair dismissal, wrongful dismissal and unlawful deduction from wages. To support his claims, he relied on conversations he had had with the company during the without prejudice meetings prior to his dismissal.

Relevant law

Section 111A(1) of the Employment Rights Act 1996 states that evidence of pre-termination negotiations is inadmissible in any proceedings on a complaint under section 111.

However, this is subject to a number of subsections, including subsection (4) which states that “In relation to anything said or done which in the tribunal's opinion was improper, or was connected with improper behaviour, subsection (1) applies only to the extent that the tribunal considers just”.

Tribunal decision

At a preliminary hearing, the employment judge held that the discussions during the without prejudice meetings between Mr Graham and the CEO prior to his dismissal were protected under section 111A(1) and/or under the common law without prejudice rule. Mr Graham could not therefore rely on the conversations to support his claims.

Mr Graham appealed on the basis that, by virtue of relying on the conversation as part of its disciplinary case against him, the company had waived its right to rely on the without prejudice rule at common law. In addition he argued that, as the company’s conduct was “improper” under section 111A(4), it should not be allowed to rely on section 111(A)(1).

EAT decision

The EAT held that although the principle of without prejudice privilege applied, the tribunal had failed to consider the issue of waiver of privilege relating to the company’s approach in the sense that it was trying to rely on part of a conversation during the disciplinary hearing while at the same time arguing that the meeting was covered by without prejudice privilege.

The EAT also agreed that Mr Graham had an arguable case of “improper conduct” against the company and that there would be a glaring injustice if he was not permitted to run this point in relation to section 111A(1) when it was being dealt with in relation to the question of waiver at common law.

It therefore remitted the claim to the same tribunal to consider these two points.