Off the record or not?

In HRNZ’s fifth in a series of articles on getting the basics right, Jack Rainbow, Associate at Dundas Street Employment Lawyers, outlines the pros and cons of without prejudice conversations and what to watch for when pursuing this path.

Where a dispute arises between an employer and employee ‘off-the-record’, or without prejudice, conversations can be used by the parties to address the concerns directly. They can be used in an attempt to resolve the dispute without need for legal recourse to the Employment Relations Authority or Employment Court.

While without prejudice communications can be an effective dispute resolution mechanism, employers must be aware of their limitations. Employers cannot use without prejudice discussions as a blunt tool, and attempting to do so can have significant consequences.

WHAT IS A WITHOUT PREJUDICE CONVERSATION?

A without prejudice discussion refers to off-therecord communications, either orally or in writing, which are aimed at settling a dispute and cannot be referred to or relied upon later by either party at legal proceedings.

According to the Evidence Act 2006, a communication may be protected by the without prejudice privilege if the communication:

• was intended to be confidential; and

• was made in connection with an attempt to settle or mediate the dispute between the parties.

The benefit of without prejudice discussions is that the parties in a dispute may be open and frank about the issues in order to come to a pragmatic resolution of the situation, without fear that the communications will be used against either party should negotiations fail.

Where genuine without prejudice communications have occurred, a court will not admit any evidence in respect of those communications. In justifying the existence of these protections, the Court of Appeal stated that:

[…] as a matter of public policy, the rule is designed to encourage parties to negotiate settlements of disputes (using that phrase in the broad sense), secure in the knowledge of two things – that whatever is said openly and honestly for that purpose will remain confidential; and that if those negotiations are unsuccessful any statements or offers made adverse to the maker cannot be considered in determining liability in later litigation.

WHEN CAN WITHOUT PREJUDICE COMMUNICATIONS OCCUR?

Employers must be cautious about when and how they engage in without prejudice communications with employees during a dispute. Describing the conversation as ‘without prejudice’, or attaching a label to the written correspondence, does not necessarily mean that the communication will be treated as such and therefore provided with the legal protection.

Several factors must arise for a legitimate without prejudice conversation to occur.

• A genuine and known dispute or problem arising between the parties must exist, which could reasonably result in litigation if the issue were not resolved.

• A relevant connection must exist between the dispute or problem and the discussion that is occurring without prejudice.

• An employee must be informed about the legal implications of what a without prejudice discussion means.

• Once aware of the implications, an employee must agree to proceed with the conversation on a without prejudice basis.

Should any of the above circumstances not exist, the communication will likely not be found to be truly without prejudice and, therefore, could be admissible in the Employment Relations Authority or Employment Court.

Where It Goes Wrong

In Philpott v Allied Press Ltd and Mainland Distribution Ltd, Ms Philpott raised several concerns about workload pressure and lack of support in a new role she had been transferred to.

During a meeting with her manager, the manager informed Ms Philpott that the meeting was proceeding on a without prejudice basis. The matter was not resolved during this meeting.

Ms Philpott then resigned from her role and pursued a personal grievance to the Employment Relations Authority, alleging that she had been constructively dismissed.

The Authority concluded that the meeting was not without prejudice and, therefore, the notes of the meeting were admissible before the Authority. This was on the basis that Ms Philpott had not understood that the meeting was to be without prejudice, nor was she given an opportunity to consent to the meeting proceeding on that basis.

Steps For Engaging In Without Prejudice Conversations

Employers engaging directly with unrepresented employees on a without prejudice basis face a significant risk, particularly given the imbalance in power in the employment relationship. The employment institutions do not look kindly upon employers who may appear to be applying pressure on an employee under the guise of without prejudice negotiations.

However, where an employer wishes to engage with an employee on a without prejudice basis, an employer should:

• advise the employee that it believes there is a live dispute between the parties, and elaborate on what the dispute is

• ask the employee whether they wish to engage in without prejudice discussions in an attempt to resolve the dispute before any further communication is given

• explain to the employee clearly and simply what a without prejudice discussion means

• offer the employee the opportunity to first seek legal advice before agreeing to speak on a without prejudice basis

• where an employee agrees for a discussion to proceed on a without prejudice basis, ensure that the explanation and agreement are confirmed in writing or in written notes.

Employers should be cautious to initiate without prejudice communications during disciplinary or performance meetings.

Where necessary, employers should first seek to conclude the disciplinary or performance aspect of the meeting before seeking to initiate further on a without prejudice basis and mark a clear delineation between where the onthe-record conversation ends and the off-the-record communication begins.

Jack Rainbow, Te Arawa Ngāti Tūwharetoa, is an Associate at Dundas Street Employment Lawyers. Jack has strong experience in industrial relations, dispute resolution and providing highlevel, strategic advice. He partners closely with his clients, providing advice and assistance from start to finish on a range of complex matters.