In Gallop v Newport City Council the Employment Appeal Tribunal has held that an inadvertent disclosure while giving evidence that there had been “without prejudice” negotiations did not waive privilege, and a tribunal should not have taken them into account when assessing an award of compensation. The point came out of an unfair dismissal case where, in response to a question from the tribunal, a witness let slip the existence of failed negotiations to settle the dispute. On the basis of the information it gathered about the offer, the tribunal found that there was a 50/50 chance that the case would have settled amicably before a hearing and so awarded him half of the sum offered in the negotiations and reduced other elements of compensation by half.
The Employment Appeal Tribunal held that the tribunal was wrong to have enquired about the terms of the agreement and wrong to take it into account in assessing the award. Neither party had set out to waive privilege, nor was there reliance on the privileged material. The EAT commented that:
Employment Tribunals must not enquire into negotiations between the parties before them where no agreement is reached and where there has been no clear and unequivocal waiver of privilege by the parties. … It is pellucidly clear to us that privilege was not waived in this case, and no advice was given to the Claimant in person as to the principles of privilege.
The outcome of the tribunal’s mistaken approach was a manifest injustice and the EAT substituted a new award disregarding the settlement offer.
Incidentally, much credit should go to the appeal judge, His Honour Judge Peter Clark, for his use of the word "pellucidly" – [puh-loo-sid] adjective: clear in meaning, expression, or style.