employment view
May/June 2007
Without Prejudice
It is public policy that parties to disputes should be encouraged to
settle those disputes without resorting to litigation.
Accordingly, parties to disputes are allowed to make offers to
settle without worrying that such offers might be used against them
at a later stage. So a dismissed employee is not permitted to argue,
for example, that ‘they offered me £200,000 to give up my claims so
they have admitted they did something wrong’: the offer is
inadmissible in evidence.
Many employers took advantage of this rule to initiate severance
discussions with employees. Typically, a letter would be given to an
employee marked ‘without prejudice’ offering a financial package for
the employee to leave. A deal was then done, and a compromise
agreement entered into, following which no claims could be brought
against the employer.
BNP Paribas v Mezzoterro
However, this practice stopped following the case of BNP Paribas v
Mezzoterro. The EAT confirmed that just because the label ‘without
prejudice’ is used does not mean that the communication is, in law,
without prejudice. In order for it to be without prejudice (and
therefore inadmissible in evidence) it must relate to an attempt to
settle an existing dispute.
In the typical situation described above, there was generally no
existing dispute: typically, the employee did not know there was a
problem until he was given the ‘without prejudice’ letter.
So following the Paribas case it was regarded as clear that if an
employer presented an employee, out of the blue, with a ‘without
prejudice’ severance proposal, that communication was not truly
‘without prejudice’. Accordingly, the employee could use the
communication as evidence that the employer had decided to terminate
his employment.
Framlington Group v Barnetson
The recent case of Framlington v Barnetson is rather more favourable
to employers.
Mr Barnetson had been appointed chief operating officer of
Farmlington in March 2005. There followed discussions between him
and the chairman about his benefits, and between March and October
he repeatedly pressed the chairman without success to provide those
extra benefits. Framlington’s eventual response was to dismiss him
in November 2005.
High Court
Mr Barnetson brought a claim in the High Court for breach of
contract. In his witness statement he referred to discussions in
which Framlington had made an offer to him.
Framlington applied for the references to be struck out as they
related to ‘without prejudice’ discussions. The judge in the High
Court decided that the negotiations over benefits was to prevent a
dispute occurring, rather than to compromise an existing dispute,
and refused to order that those discussions be cut from Mr
Barnetson’s witness statement.
Court of Appeal
Framlington appealed to the Court of Appeal which allowed the
appeal.
The main issue on appeal was whether the negotiations constituted a
dispute and whether they were sufficiently proximate to the
litigation to engage the ‘without prejudice’ rule.
The Court of Appeal confirmed that the ‘without prejudice’ rule is
founded on the public policy of encouraging litigants to settle
their differences rather than litigate them to a finish. It followed
that to give full effect to the underlying public policy a dispute
could engage the rule nothwithstanding that litigation had not yet
begun. If the privilege were confined to settlement communications
once litigation had been threatened or shortly before it was begun,
both sides would have an incentive to make threats of litigation
before they could safely start talking sensibly. However the ambit
of the rule should not be extended any further than was necessary to
promote the public policy interest. The claim to privilege could not
turn on proximity in time to the litigation, but rather on the
subject matter of the dispute.
Confining the operation of the rule, as the judge did in the High
Court, to negotiations after the threat of litigation, or by
reference to some limit set close before litigation, did not fully
serve the public policy interest
.
So Mr Barnetson was not permitted to refer to the discussions in his
witness statement.
Returning to the same job
It is well known that a woman returning from maternity leave is
usually entitled to return to her old job, but until recently there
have been no EAT decisions on precisely what this means. In the
recent case of Blundell v Governing Body of St Andrew’s Catholic
Primary School the Employment Appeal Tribunal have considered this
question.
Bludnell v St Andrew’s
Mrs Blundell was a teacher in St Andrew’s Catholic Primary School.
In that school, it was the practice that each teacher taught a
particular class for two years and was then moved to a different
class, having first been asked which class she would like to teach
next.
Mrs Blundell taught the reception class before going on maternity
leave. When she returned, she was not asked which class she would
like to teach: she was told that she had been moved to teach a year
2 class.
She brought a claim in the employment tribunal on the basis that she
had a right to return to teach the reception class as that was "the
job in which she was employed before her absence".
Employment Tribunal
The employment tribunal dismissed the claim. They found that Mrs
Blundell was employed as a teacher, and not more specifically as a
teacher of a particular class.
As a teacher she could be required to teach any class within the
school. It was within the remit of the Headmistress to place Mrs
Blundell in any class she chose within her discretion as head
teacher. So the expression of a preference by a teacher did not
determine the class that that teacher would in fact be allocated.
Employment Appeal Tribunal
Mrs Blundell appealed to the EAT. The EAT looked at the relevant
regulation which defines “job” as follows:
"'job’, in relation to an employee returning after additional
maternity leave … means the nature of the work which she is employed
to do in accordance with her contract and the capacity and place in
which she is so employed".
and said that employment tribunals will therefore need to address
three matters: "nature", "capacity" and "place". The EAT made it
clear that the employment contract itself does not determine what
the “job” is.
The EAT held that in the circumstances of this case Mrs Blundell was
not entitled to return to teaching the same class that she was
teaching when she started her maternity leave.
However, the EAT held that Mrs Blundell had been subjected to a
detriment in not being given the opportunity to express a preference
as to the class she would like to teach: she would of course have
been given the opportunity if she not been absent on maternity
leave.
Conclusion
Employers need to exercise care in identifying precisely what is the
"'job” in relation to an employee returning after additional
maternity leave.
And it is important to treat women on maternity leave in exactly the
same way as other employees.
Conditions in compromise agreements
"... you warrant as a strict condition of this agreement that as at
the date hereof there are no circumstances of which you are aware or
of which you ought to be aware which would constitute a repudiatory
breach on your part of your contract of employment which would
entitle the company to terminate your employment without notice ..."
The above clause, sometimes found in compromise agreements for
senior executives, was the subject of a recent decision of High
Court in the case of Collidge v Freeport Plc.
Collidge v Freeport Plc
Mr Collidge was the chief executive of Freeport Plc. Allegations
were made against him. A compromise agreement was entered into under
which he resigned and the company paid him £445,000. However, before
the payment was due, the company 's solicitors wrote to Mr
Collidge's solicitors, saying that an internal investigation had
uncovered evidence showing that Mr Collidge was in breach of the
warranty set out above. The allegations included the misuse of a
company credit card and the claiming of personal expenditure as
company expenditure.
The company refused to pay the £445,000 and Mr Collidge brought a
claim for breach of con
tract. Freeport’s defence was that it was not obliged to make any
payments under the terms of the compromise agreement because at the
date of the compromise agreement there were breaches of his contract
of employment entitling Freeport to dismiss Mr Collidge summarily.
High Court
The High Court held that the effect of the clause above (together
with other wording in the compromise agreement) was that if the
facts were not as set out the above clause, Freeport was under no
obligation to pay.
The High Court found that on the date the compromise agreement was
made there were circumstances entitling Freeport to dismiss Mr
Collidge summarily.
So the end result was that the company did not have to pay the
£445,000.
Smokefree workplaces
Statutory Regulations made under The Health Act 2006 come into force
on 1st July 2007. They effectively ban smoking in all enclosed
workplaces and public places, subject to a few exceptions.
Managers of smokefree premises and vehicles will have legal
responsibilities to prevent smoking and to ensure that no-smoking
signs are displayed as required by the new law. Failure to comply
with the new law will be a criminal offence.
Helpful guidance on the new legislation can be found at:
www.smokefreeengland.co.uk