Privilege and 'cloaking' dismissals as redundancy

As we reported in October 2018, the Employment Appeal Tribunal (EAT) held that advice on dismissing an employee as part of a redundancy exercise, in order to limit the risk of them pursuing complaints of discrimination, fell under the "iniquity principle". This meant that the advice was not protected by legal advice privilege and could be disclosed in subsequent legal proceedings.

In Curless v Shell International Limited (previously called X v Y), the Court of Appeal has now overturned that decision, and held that this advice is subject to legal advice privilege.

In this case, the evidence in question was an email which was marked "Legally Privileged and Confidential". It began by highlighting that the employer sought to reduce the number of senior lawyer roles in their organisation. The email then moved on to refer to Mr Curless and stated that an ongoing redundancy process would be "their [Shell's] best opportunity" to dismiss him, since "there is at least a wider reorganisation and process at play that we could put this into the context of".

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

The email referred to the fact that Mr Curless had faced concerns about his performance for a number of years and had issued tribunal proceedings and raised a grievance alleging disability discrimination.  He was eventually dismissed under the redundancy process referred to in the lawyer's email. Following this dismissal, Mr Curless brought further disability discrimination and unfair dismissal claims and sought to rely on the evidence contained in the email advice.

The EAT said that the advice was "iniquitous", because it advised on how to take an unlawful course of action. As there can be no confidence in an inquity, the EAT's view was that the protection of privilege which would normally attach to legal advice was lost, and the email was discloseable.

Shell appealed that decision to the Court of Appeal, which has disagreed with the EAT's analysis. The Court of Appeal has said that the discrimination and victimisation which it is alleged had occurred is not sufficient to amount to an 'inquity' which would disapply legal advice privilege. In fact, the Court of Appeal's view was that the email in question contained the sort of advice that lawyers give day in, day out in cases where an employer believes (rightly or wrongly) that an employee is underperforming.  As such, the email did not contain advice to act in an iniquitous or underhand way, and therefore can benefit from the protection of legal advice privilege.

Employers will be reassured by this decision when seeking advice from their lawyers about potentially risky dismissals, whether for redundancy or any other reason. The decision confirms that advice that concerns potential discrimination and victimisation does not meet the high threshold of 'inequity', which is required for legal advice privilege to fall away.

In practice, it is rare for this type of communication to come to light in any event – in this case, the email in question was sent to Mr Curless in the post by an anonymous supporter. But the Court of Appeal's decision will mean that employers can be more confident that advice sought on dismissing a 'difficult' employee is now more likely to remain 'off the record' in any subsequent proceedings.

Contributor: Sarah Maddock