Employment Appeals Tribunal clarifies circumstances under privilege lost

A recent case has clarified the circumstances under which legal advice privilege can be lost due to irrelevant communications or documents having been created with a criminal or fraudulent design (the so-called "iniquity principle").

Last month the Employment Appeals Tribunal held, in the case of X v Y Ltd, that an email between a lawyer and client was not covered by legal advice privilege because it contained advice about how the client could "cloak" the dismissal of an employee as a redundancy dismissal. The EAT felt it was clear from the email that the real reason for the dismissal was the employee's continuing complaints about disability discrimination.

This case is of potential relevance to any situation where a client seeks advice from their legal advisor about members of staff who are perceived as 'difficult'. In some cases clients may ask their lawyers if there is any way they can dismiss these staff members without opening themselves up to a claim.

The email in question was marked "Legally Privileged and Confidential". It began by highlighting that the client was looking to reduce the number of senior lawyer roles in their organisation. The email then moved on to refer to a specific individual and stated as follows:

That this redundancy process would be "their best opportunity" since "there is at least a wider reorganisation and process at play that we could put this into the context of".

It went on to state that "otherwise we risk impasse and proceedings with ongoing employment with no obvious resolution".

The employee this email referred to had faced concerns about his performance for a number of years and had issued tribunal proceedings and raised a grievance alleging disability discrimination a few years before. He was eventually dismissed under the redundancy process referred to in the lawyer's email. Following this dismissal the employee brought further disability discrimination and unfair dismissal claims.

In its decision the EAT gave three examples to help illustrate when legal advice will lose privilege as a result of iniquity:

1. Advising that a certain course of action could be unlawful would not be iniquitous.
2. Advising that a course of action could be taken notwithstanding that it may be unlawful could be iniquitous.
3. Advising how to take an unlawful course of action would be iniquitous.

The EAT held that the lawyer's email in this case fell in to the latter category. There was a strong prima facie case of iniquity and privilege was, therefore, waived in relation to the email (i.e. the claimant could rely on this, extremely potent, piece of evidence to support his claims).

The likelihood of such questions over privilege arising should not be overstated. In this case a copy of the email in question was sent to the claimant anonymously in the post, had this not happened it appears very unlikely he would have sought disclosure of the email. However, the fact that this judgment provides for a fairly broad application of the iniquity principle should be of interest to employers. It serves as a reminder that there are significant risks associated with attempting to conceal the true reason for dismissals.

We are very experienced in conducting and advising on employment tribunal litigation for employers. Please contact Stuart McBride, partner and national head of employment, to discuss your requirements.