Legal advice not always confidential says EAT

There are exceptions to the rule that legal advice given to a client cannot be referred to in an employment tribunal

Legal advice given by a lawyer to a client is usually private and confidential between the parties and cannot be referred to in employment tribunal proceedings (‘legal advice privilege’). However there are some important, if rarely used, exceptions to this rule.

In the recent case X v Y Limited, the Employment Appeal Tribunal (EAT) has caused some degree of alarm to employment lawyers and HR practitioners by holding that an e-mail from an in-house legal team to a client, advising on an individual’s potential inclusion in a planned redundancy exercise, should not remain confidential and could be used as evidence in the employee’s claim of discrimination/victimisation.

What happened?

The claimant, a senior lawyer, had been employed by the respondent legal practice for 27 years until his dismissal in January 2017. His employer told the employment tribunal that there were ongoing concerns about his performance at work. In turn he alleged that his firm had discriminated against him on the grounds of his disabilities (Type 2 diabetes and obstructive sleep apnoea) and had failed to make reasonable adjustments, issuing a claim in August 2015 and raising a further grievance in January 2016.

In April 2016, following the acquisition of another firm, the employer set out a programme of voluntary redundancy. The claimant unsuccessfully applied for a number of roles and was subsequently placed in a redundancy consultation process.

Shortly afterwards, he overheard a conversation in a pub where the redundancy exercise was being discussed. A party to this discussion commented that she was dealing with a complaint from a senior lawyer at the claimant’s firm, but there was a good opportunity to “manage him out” through severance or redundancy. The claimant was also anonymously sent a copy e-mail from his employer’s in-house legal team advising on his complaint, stating that “there is at least a wider reorganisation and redundancy process at play that we could put this into the context of” and that “otherwise we risk impasse and proceedings with ongoing employment with no obvious resolution”.

When the claimant was selected for redundancy, he made a further employment tribunal claim, citing the e-mail as evidence that he had been victimised because he had made previous complaints.

The decision

The employment tribunal that first heard the claim held that the claimant could not refer to the e-mail, as it was covered by legal advice privilege. However, surprisingly, the EAT disagreed with this, holding that advice “sought or given for the purposes of effecting iniquity” is not confidential. This exception is usually only applied to cases where fraud or serious criminal activity is alleged.

The Employment Judge carefully considered how the e-mail should be interpreted. The key question, as they saw it, was whether the advice simply pointed out the risk of further claims if the claimant was selected for redundancy or whether it went further and advised that redundancy could be used as a “cloak” for dismissing the claimant who was troublesome to his employer because of his continuing allegations of discrimination.

The EAT favoured the latter interpretation, and decided the advice had been “for the purposes of effecting iniquity” as there had been an intention to deceive the claimant and potentially to deceive the employment tribunal (if redundancy was cited as the reason for dismissal at a later hearing when the claimant had not in fact been fairly and genuinely selected for that reason). The e-mail was therefore not protected by legal advice privilege and could be referred to by the claimant in his discrimination claim. The EAT firmly rejected any suggestion that the pub conversation should be protected by legal advice privilege.

What does this mean for me?

First and foremost, this decision is a stark reminder to all legal and HR professionals of the dangers of discussing confidential employment matters in public (for example at social events or on the train). This can not only be commercially damaging but may also crop up embarrassingly in front of an employment tribunal.

Most employment lawyers and HR professionals will recognise the type of e-mail exchange described in this case. Of course, most responsible employers will never set out to intentionally victimise an employee. However there may be situations where the employment relationship has broken down, or a dispute has become intractable, and a dismissal for redundancy would be convenient and ‘save face’ for both parties. Caution and discretion are essential in these difficult circumstances.

If you are currently planning a redundancy or reorganisation exercise, as always take care to ensure that your processes are fair and transparent. Plainly, it will be of assistance if the facts illustrate some genuine basis for redundancy selection. If you have concerns about a particular individual, for example where there are ongoing employment tribunal proceedings or you anticipate a claim if an employee is selected, seek legal advice at an early stage and before committing your position to writing.

Comment

It is important to note that this decision does not change the basic principle that legal advice will usually be confidential. However, it does seem to broaden the circumstances where legal advice privilege might be lost; from cases where fraud or serious misconduct is alleged; to much more nuanced circumstances where an employer and their legal advisor are exploring options for resolution of a workplace problem. The prospect of this kind of day to day exploratory discussion being used as evidence in employment tribunal proceedings is naturally of concern for employment lawyers and HR practitioners, but it should not be something to be unduly fearful of. It remains valid for options to be evaluated upon their respective merits and associated risks considered.

For confidentiality reasons, the full text of the controversial e-mail is not reproduced in the EAT Judgment, making it difficult to draw any firm conclusions about what words or phrases are likely to raise red flags for an employment tribunal. This remains a matter of professional judgment. As a baseline principle, it would be wise to steer clear of any narrative which could be viewed as underhand or deceitful on the available facts.

It is possible that this case may progress to the Court of Appeal to be considered further. We will keep you updated.

If you have any question or would like to know more about our update, please contact Ben Daniel (Partner) or your usual Weightmans advisor.

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