David Grindle is the director in charge of the employment law team at WRMK Lawyers. He has practised in this area of the law for 17 years.

OPINION

Increasingly, people are looking to resolve their disputes without resorting to time-consuming, stressful and expensive formal litigation.

Employment disputes are no exception and have a high rate of out-of-court settlement.

A key feature in finding such a solution is the ability to speak “without prejudice”. This means confidential, “off-the-record” communication between the parties – effectively, having a frank and honest discussion without the fear that any content will be used against you in subsequent formal proceedings if agreement is not reached.

Good lawyers use these discussions regularly to assist employers and employees in reaching sensible resolutions.

When to use ‘without prejudice’ in an employment setting

The Court of Appeal has reinforced the importance of such conversations and set out the situations where such conversations will be protected. In Morgan v Whanganui College Board of Trustees, Kenneth Lee Morgan, a teacher at what was then Wanganui Collegiate School, was involved in a disciplinary process after breaking up a fight between two students.

During this process, a without prejudice conversation took place between the lawyers representing Morgan and the school. Despite Morgan’s subsequent dismissal and his claims against the confidentiality of the conversation, the Court of Appeal dismissed his arguments.

Such confidential communications are available if “there exists a serious employment relationship problem that could give rise to litigation, the result of which might be affected by an admission made during negotiations”.

Naturally, this includes situations where misconduct or serious misconduct has been admitted, but disciplinary action has not yet been decided. The court also used a contractual basis to support this decision – if the parties agree that the conversation is to be confidential, then that agreement cannot later be withdrawn.

The court was unimpressed with the constructive dismissal and blackmail arguments.

The communications were viewed as a good-faith attempt to assist Morgan by offering to accept his resignation and avoiding the necessity to report his serious misconduct to the Teacher’s Council. There was no threat, simply a statement of the statutory requirement.

However, employers who directly engage with their staff in without prejudice conversations are on very shaky territory because if the without prejudice title of the communication does not apply in the circumstances, the employee will have a strong claim for constructive dismissal.

Not a licence to ignore employer’s duties

It is important to note that without prejudice communications do not provide a free licence to breach substantive or procedural duties in the employment relationship.

Employers should be reluctant to engage in these kinds of communications unless they have first received legal advice. However, when used strategically and correctly, they can avoid significant time, stress, and financial cost.