Should the without prejudice rule apply to your settlement agreement? 

Settlement negotiations are generally subject to the ‘without prejudice’ rule. This means that evidence of genuine attempts to settle an existing dispute cannot be disclosed in tribunal or court proceedings.

There are a number of very narrow exceptions when the ‘without prejudice’ rule falls away. The rule cannot be relied on if it would act as a cloak to exclude evidence of ‘perjury, blackmail or other unambiguous impropriety’ (Unilver PLC v Proctor & Gamble Co [1999] EWCA Civ 3027).

In the recent Employment Appeal Tribunal (EAT) case of Sarah Garrod v Riverstone Management Ltd [2022] EAT 177 Ms Garrod tried to argue that without prejudice settlement negotiations she had had with her employer were made with a discriminatory motive, and therefore fell within the unambiguous impropriety exception.

Both the employment tribunal and the EAT rejected her arguments.

The brief facts

Ms Garrod submitted a grievance to her employer alleging pregnancy and maternity discrimination, bullying and harassment. At the end of the formal grievance meeting, the Company’s adviser said he would like to have a ‘without prejudice’ conversation with her. He assumed she knew what he meant by ‘without prejudice’. He described the working relationship as ‘fractured and problematic’ and put forward a severance package of £80,000 on behalf of the employer to terminate her employment under a settlement agreement . No agreement was reached over the severance package, the employer rejected her grievance and Ms Garrod resigned.

Ms Garrod brought claims of pregnancy and maternity discrimination, harassment and (later added) constructive unfair dismissal. Ms Garrard expressly referred to the without prejudice discussions in her tribunal claim form. She stated that Riverstone’s adviser had told her “in no uncertain terms that he did not care about her grievance, and he was there to make an offer to terminate her employment”.

Riverstone Management argued that these references should be excluded under the without prejudice rule.

The Employment Tribunal Decision

A Preliminary Hearing was held to decide the issue. The Employment Tribunal agreed with Riverstone that the without prejudice rule did apply because:

• Without prejudice conversations are meant to cover existing disputes. There was an existing dispute in this case because Ms Garrod had raised them in her grievance.
• Both parties might reasonably have expected litigation to follow if a settlement could not be reached. Ms Garrod had referred to ACAS Early Conciliation in the without prejudice meeting.
• There was no evidence of unambiguous impropriety or improper behaviour. The Tribunal accepted evidence that Riverstone’s adviser had been nothing but polite & professional. It rejected Ms Garrod’s evidence that he had been overbearing and aggressive.
• The Tribunal also rejected Ms Garrod’s evidence that she did not understand the without prejudice rule.

Ms Garrod appealed to the EAT. One of her grounds of appeal was that the tribunal judge had erred in finding no unambiguous impropriety. She argued that Riverstone had tried to use the without prejudice rule to push her out of her job for discriminatory reasons connected with her pregnancy and maternity leave and that it was unambiguously improper for Riverstone to tell her, in effect, that she had no future at the company.

The EAT Judgment

The EAT held that that Ms Garrod has tried to place a discriminatory interpretation on the act of  proposing a consensual termination.  The Tribunal Judge had made no adverse findings about the way Riverstone’s adviser had conducted the meeting. Therefore the employer’s actions fell far short of the sort of ‘unambiguous impropriety’ of which perjury and blackmail are examples. The Tribunal was entitled to find that the without prejudice rule applied in this case.

Furthermore the Ms Garrod subsequently ordered to pay £3,400 in costs for making unfounded allegations against Riverstone’s adviser of trickery, perjury and blackmail.

If you have received a settlement agreement from your employer, deciding what to do next can be difficult. If you need help filling out the form or have a question about an employment settlement agreement you have received, please call our dedicated Settlement Agreement Helpline on 07920144787