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Employment Law Case Update: X v Y Ltd

Sep 6, 2018

Legal advice privilege entitles a party to withhold evidence from a third party or the court. This applies to confidential communications which:

  1. pass between a client and the client’s lawyer; and
  2. exist for the purpose of giving or receiving legal advice about what should sensibly be done in the relevant legal context.

However, this privilege can be lost under the “iniquity principle” or the “fraud exception”, where a communication or document comes into being for the purpose of furthering criminal or fraudulent activity.

X was a lawyer who’d been employed by Y since 1990. He suffered from type 2 diabetes and obstructive sleep apnoea, leading to concerns about his work since 2011. In 2015 and 2016 he issued disability discrimination related tribunal proceedings and raised a grievance against Y.

In April 2016, Y started a redundancy process and X was dismissed by reason of redundancy on 31 January 2017. X then issued further proceedings in the Employment Tribunal (ET) for disability discrimination, victimisation and unfair dismissal.

During the proceedings, X relied on a copy of an email dated 29 April 2016 which had been sent to him anonymously in the post. Marked ‘Legally Privileged and Confidential’ it was later discovered to be sent by a senior lawyer working at Y to the lawyer representing  X. Y did not disclose the email to the ET before proceedings began, believing this fell under legal privilege.

X argued that the email contained advice on how to use the redundancy process to cloak an act of unlawful victimisation in dismissing him, and fell under the iniquity principle so should lose its privileged status.

The case eventually reached the Employment Appeal Tribunal (EAT), which looked at whether the email was simply Y pointing out the risk of having claims brought against them if X was dismissed by reason of redundancy, or if it went further; advising that the redundancy process could be used as a cloak for dismissing X, who’d been causing trouble with allegations of discrimination.

The EAT found the advice was to use the redundancy process as a cloak for any wrongdoings. The email mentioned a specific individual and included phrases not normally expected, or needed, in redundancy advice. Most importantly, the email did not advise on neutral selection criteria, but instead focused on a specific person.

The EAT also examined whether the email should fall within the iniquity principle, which is usually based on furthering a criminal or fraudulent act. This does not extend to advising that a course of action runs the risk of being unlawful, however, this case involved discrimination and victimisation elements. The EAT found that, depending on the degree of the advice, the cloaking of a potential discrimination claim is unacceptable and should be brought to the public’s attention.

The EAT found a strong case that the advice was not only designed to deceive X, but also to deceive an ET should proceedings be brought. If the email hadn’t been sent to X anonymously, the ET may have never been aware of the existence of the cloaking mechanism at work.

X argued that the email contained advice on how to use the redundancy process to cloak an act of unlawful victimisation in dismissing him, and fell under the iniquity principle so should lose its privileged status.

This article is from our weekly Employment Law Newsletter published on 06/09/2018.  If you would like to receive this newsletter directly and be kept up to date with recent cases and Employment Law news, email events@warnergoodman.co.uk.

ENDS

This is for information purposes only and is no substitute for, and should not be interpreted as, legal advice.