Compromise agreements and without prejudice discussions

Jahad Rahman summarises the decision of the EAT in the case of Gallop v Newport City Council [2012] for Daniel Barnett’s Employment Law Bulletin.

Is evidence of without prejudice negotiations revealed during testimony admissible?

No, says the EAT in the case of Gallop v Newport City Council.

Mr Gallop was employed by Newport City Council as a training officer. He was dismissed for alleged gross misconduct. Prior to his dismissal, the parties attempted to reach a compromise but those attempts failed and no agreement was reached.

He brought a claim for unfair dismissal and disability discrimination. During the course of the Tribunal hearing, one of the Council’s witnesses mentioned, in response to a question asked by a wing-member of the Tribunal, that they had been approached by a trade union representative to discuss a possible settlement agreement.

The Tribunal found that Mr Gallop had been unfairly dismissed. On the issue of compensation, during the remedy hearing, Mr Gallop confirmed that he was happy with the money offered in the compromise agreement but his legal adviser was not happy with it. The Tribunal concluded that if he had not been dismissed, there was a 50% chance that he would have entered into a compromise agreement. As a result, the Tribunal reduced the loss of earnings, pension loss and notice pay awards by 50% and awarded Mr Gallop 50% of the sum previously offered by the Council.

Mr Gallop appealed the decision. The EAT held that the Tribunal should not have taken into account the without prejudice negotiations “absent a clear waiver by the parties”. The EAT found that the parties had not voluntarily waived privilege in this case because the point only arose as a result of an innocent enquiry by one of the wing-members of the Tribunal. As such, Mr Gallop’s appeal against the 50% reduction to his compensatory award was allowed.

If you would like advice on a compromise agreement or any other employment law matter, then please contact our compromise agreement solicitors today, based in Canary Wharf for expert employment law advice on 020 3950 5234 or email info@rllaw.co.uk.