HR briefing - June 2022

27 June 2022

Welcome to this month's briefing for HR teams and in-house employment counsel – bringing you this month’s employment law highlights in an easy-to-read package.

“Without prejudice”

The majority of employment disputes end in settlement. Parties typically negotiate those settlements in “without prejudice” discussions, so that anything said cannot be referred to in any subsequent tribunal proceedings, should the negotiations prove unsuccessful. This extremely useful rule of evidence, akin to legal professional privilege, allows parties to negotiate freely and put their cards on the table. It does, however, have limits – the most important of which is the rule that without prejudice cannot be used to cloak “unambiguous impropriety”. This label usually means such obviously improper activity as bribery, perjury, blackmail, threats and so on. Importantly for employment and HR professionals, it also means that any discriminatory acts will be admissible in evidence and not shielded by the without prejudice rule. A recent Employment Appeal Tribunal (EAT) decision has examined the fine line between making allegations that are entirely unsupported by any evidence whatsoever – which would be unambiguously improper – and making exaggerated or implausible or disingenuous claims for which there is some evidence – which could still be without prejudice. In this case, the employee had copied her grievance, which included some information about the company and her colleagues, to her personal email address and blind-copied some of it to her husband. She said this was in order to have copies that she could later use in any claim. The employer’s initial response was to ask her to delete the emails, reminding her that strictly speaking that was a breach of the data privacy policy.

Negotiations then began, and solicitors for the employer wrote without prejudice, suggesting that the employee might have committed a criminal offence in sending the emails in question, might have breached her FCA regulated status obligations, and might have committed gross misconduct. This was obviously designed to drive her towards accepting the settlement offer on the table. The EAT concluded that the letter was (just about) on the acceptable side of the line. The employee’s actions could potentially be characterised in the way the solicitors’ letter described them, so even through there exaggeration, there was not impropriety.

The key take-away is that clients and their lawyers should carefully consider the content and tone of without prejudice communications to ensure these are appropriate and proper.

Post-termination restrictions

Many clients will include post-termination restrictions, or restrictive covenants, in their employment contracts, particularly for senior management. These will typically prohibit an employee from working for a competitor, going after clients, and/or poaching staff for a defined period after the end of their employment. In conjunction with any garden leave provisions, this creates a period “out of the market” in which the employer can seek to shore up its client base, retain its key employees, and protect its confidential information. The concept of a defined period is critical, as the courts will look carefully at the scope and extent of any restriction, and will only enforce a provision that goes no further than is reasonable to protect the employer’s legitimate interests. One side-effect of that basic principle is that clients should act quickly if they discover a breach – any tardiness may endanger their position, particularly if the restricted period is relatively short.

In a recent case, the Court of Appeal ruled that although a 12-month non-compete covenant was enforceable on the face of it, the employer’s delay in taking action meant that the balance of convenience favoured not granting an injunction. Here, the employee had joined a competitor on 1 September 2021. The employer discovered this the next day, but chose not to write a letter before action until 20 September, and not to start proceedings until 21 October. The employee had therefore been working in his new role for two months by the time the High Court came to hear the case. The Court of Appeal described this timetable as “stately”, criticising the employer for not having acted more expeditiously so that the courts can intervene before any lasting damage has been done.

Clients who are concerned that employees may be about to breach their restrictive covenants should seek legal advice as a matter of urgency.