Without prejudice privilege protects communications from being relied on by parties in legal proceedings, such as those in the Employment Relations Authority or Court. This might also be referred to as ‘off the record’ discussions. Generally, without prejudice privilege allows for free and frank discussions without fear of retribution in relation to those communications later down the line – for example, an employee would not be able to say “my employer offered me money to resign” as part of a personal grievance, if that offer was made on a without prejudice basis.
Of course, if the without prejudice communications resulted in an agreement, this agreement would likely be recorded in writing and could be relied upon and enforced by either party, despite the preceding communications being without prejudice.
How to make sure without prejudice communications are actually without prejudice
Generally, without prejudice communications must be a discussion that is aimed at resolving legal proceedings that are anticipated, or already on foot. In the employment context, the concept of a dispute is viewed in broader terms, allowing without prejudice privilege to be claimed where there is a problem arising out of the employment relationship, i.e. a difference between the parties that could lead to a personal grievance or other employment relationship problem.
In an employment context, for communications to be covered by without prejudice privilege, there must be:
- a problem relating to or arising out of the employment relationship that could give rise to litigation[1]; and
- generally, an agreement by both parties to speak on a without prejudice basis for the purpose of resolving that employment relationship problem.
You cannot make a conversation without prejudice just by saying that it is – the intention of the conversation must be to reach agreement about the resolution of the employment relationship problem.
Risks to be aware of
Asking someone to speak on a without prejudice basis where there is no existing employment relationship problem or difference in views is high risk. First, there is a possibility the employee may say no – and now they are aware (at least generally) of the employer’s intentions. Second, if the other party does agree to speak on a without prejudice basis and later attempts to rely on the content of these communications to support their claims, the Authority or Court may have to assess what privilege, if any, attaches to the correspondence. If there was no employment relationship problem at the time, the likelihood is that the communications were not exchanged on a genuinely without prejudice basis – and therefore may be admissible as evidence. Any exchange that a party thought was off the record, could be very damaging to their legal position.
If the other party is not a lawyer, it may pay to explain the meaning of without prejudice privilege/speaking on a without prejudice basis, so that everyone is on the same page regarding the ramifications of this.
Are times changing?
This year has seen a lot of change in the employment law space. One proposed amendment that is still on the horizon is the Employment Relations (Termination of Employment by Agreement) Amendment Bill (Bill). This Bill seeks to “facilitate protected conversations between employers and employees to allow them to come to a mutual agreement to terminate employment”, signalling a departure from without prejudice termination negotiations as we know them to be.[2]
Currently, it would not be lawful for an employer to approach an employee ‘out of the blue’ with a proposal to exit employment in return for a payment (this would not be without prejudice because there is no employment relationship problem on foot). The Bill would change this.
If a request to enter into pre-termination negotiations complies with the requirements in the Bill, then evidence of those negotiations would be inadmissible in any proceeding before the Authority or Court. There are a number of process requirements, such as advising an employee to take independent advice and carve outs, including unfair pre-termination negotiations, and other scenarios such as where a defect in the pre-termination negotiation process results in the unfair treatment of the employee.
Employers and employees should use caution before entering ‘off the record’ discussions
For the time being, the status quo remains, and our recommendation is that employers are careful about engaging in what they believe to be ‘off the record’ discussions – especially where there is no employment relationship problem on foot. Employers should also get explicit agreement from the employee to speak on a without prejudice basis. For employees, we recommend that if your employer asks to have a without prejudice discussion, you seek advice from a specialist employment lawyer.
If you have any questions about without prejudice discussions, please get in touch with our Employment law team or your usual contact at Hesketh Henry.
Disclaimer: The information contained in this article is current at the date of publishing and is of a general nature. It should be used as a guide only and not as a substitute for obtaining legal advice. Specific legal advice should be sought where required.
[1] Morgan v Whanganui College Board of Trustees [2014] NZCA 340 at [21]
[2] Employment Relations (Termination of Employment by Agreement) Amendment Bill
