399: When can ‘without prejudice’ talks happen at grievance hearings?

In the recent Employment Appeal Tribunal (EAT) decision of Garrod v Riverstone Management Ltd, it was upheld that a settlement offer made was without prejudice and therefore inadmissible as evidence in the later Tribunal proceedings, despite the fact that the offer was presented in a grievance hearing.

It is well-established in employment law that settlement offers made to an employee on a without prejudice basis cannot be referred to in subsequent Tribunal proceedings. The offer can only be without prejudice if settlement discussions are a genuine attempt to resolve an existing dispute and are conducted without serious wrongdoing. The parties must also have contemplated that litigation might follow if terms cannot be agreed.

After returning from maternity leave, Mrs Garrod filed a grievance against three senior managers alleging pregnancy and maternity discrimination, bullying and harassment. During a meeting held to discuss these allegations, the company’s external HR and employment law adviser, Mr Sherrard, said that he would like to have a without prejudice conversation. He described Mrs Garrod’s employment relationship as problematic and offered £80,000 to terminate her employment. No agreement was reached and Mrs Garrod’s grievance was rejected. She later resigned and brought claims of pregnancy and maternity discrimination, harassment and unfair constructive dismissal.

Mrs Garrod’s particulars of claim referred to the meeting with Mr Sherrard. Riverstone argued that these references should be excluded on the basis of without prejudice privilege. Mrs Garrod argued that privilege did not apply because Mr Sherrard’s manner had been aggressive and intimidating, and Riverstone had tried to use the without prejudice rule to force her out of the business. A key issue for determining the status of the offer was whether an employee’s grievance constituted an existing ‘dispute’ in which settlement discussions could be a genuine attempt to resolve it, with previous case law ruling against this.

At a preliminary hearing to determine this issue, the Employment Tribunal held that the without prejudice rule applied to the settlement offer. There was an existing dispute at the time of the meeting and Mr Sherrard’s behaviour had been polite and professional.

The EAT has also dismissed Mrs Garrod’s appeal, ruling that the Tribunal was plainly entitled to conclude that the dispute in relation to her Tribunal claims already existed at the time of the grievance meeting. This was supported by the language of her grievance, which referred to Acas early conciliation and infringement of her legal rights. The EAT also rejected Mrs Garrod’s argument that Mr Sherrard’s settlement proposal was discriminatory. Any criticism of her employer in this situation fell far short of the sort of exceptional conduct that could disapply the without prejudice rule, such as perjury or blackmail. Unlike a previous case relied upon by Mrs Garrod where an act of unlawful discrimination occurred during a without prejudice meeting itself, Mrs Garrod’s claims, by contrast, were all based on the allegations covered in her grievance.

This case confirms that a grievance may amount to an existing dispute for the purposes of applying the without prejudice rule. However, this will depend on the precise facts and circumstances. It is important to note that labelling a discussion as without prejudice does not necessarily mean that this is so. This case also illustrates that the without prejudice rule will only be disapplied in very exceptional circumstances.

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