knowledge | 9 October 2018 |

Recent Developments in Legal Privilege and Employment Advice

A recent decision of the UK Employment Appeals Tribunal (the “Tribunal”) raises the spectre of legal advice given to employers in particular circumstances potentially losing the benefit of legal privilege and becoming subject to disclosure (such as through a data access request).

Legal professional privilege is rooted in the public interest in the administration of justice and precludes the disclosure of confidential communications between lawyer and client.  It is accepted that clients and legal advisers should be free to be candid and to give and receive advice without concern that the communications may be made public.


However, a recent decision held that advice which is sought or given for the purpose of “effecting iniquity” is not privileged.  In X –v- Y, the Tribunal found that legal advice privilege had been lost by application of the iniquity principle where it advised that a genuine redundancy exercise could be used to dismiss the Claimant, where the dismissal was due to the Claimant’s complaints of discrimination.  That privilege can be lost where advice is in furtherance of nefarious purposes is well-known; however the application of this principle in the context of an employment dispute is a novel development and it remains to be seen how the Irish courts will view this decision.


Factual background


In brief, X –v- Y concerned a lawyer who, prior to his termination by reason of redundancy, had been employed by the Respondent for some 17 years and who, in the course of his employment, had made claims of disability discrimination and a failure to reasonably accommodate against the Respondent. The Tribunal heard evidence of a conversation overheard by the Claimant in a public house in the course of which it was allegedly said that a lawyer at the Respondent had taken a discrimination complaint and could be managed out of the organisation by way of severance or redundancy.


This conversation was relied upon by the Claimant to interpret an email of advice from a solicitor to the Respondent, which was forwarded to the Claimant anonymously.  Although this email is not set out in the judgment, the Claimant contended that it contained advice on how to victimise him by seeking to use redundancy as a cloak to dismiss him following his complaints against the Company.  For that reason, he argued, it was not subject to legal advice privilege due to the iniquity principle.


Interpreting the email


The Tribunal, in interpreting the email, did not take into account the overheard conversation in the pub which took place some three weeks earlier.  It would be unsafe to do so given that the speaker had not been identified, had not been authorised by the Respondent and given that there was no contemporaneous note of the conversation.


However, the Tribunal determined that the email recorded a device to fulfil a long-held wish to dismiss the Claimant.  Slade J noted that the first paragraph of the email appears innocuous in setting out the Respondent’s wish to reduce the number of senior lawyer roles in its organisation.  However, the email had not recorded any general advice on selection for redundancy (there were two other lawyers at the level of the Claimant) and instead focused on how to deal with “the individual“ (ie the Claimant).  The email records that redundancy provides the “best opportunity” for the Respondent to manage out “the individual”, in respect of whom there had been continuing complaints and difficulties with his employment, or else face an impasse and proceedings with no obvious resolution.  


It was held that the email went beyond pointing out the risk of claims if the Claimant was selected for redundancy and went further in advising that the genuine redundancy exercise could be used as a cloak with which to dismiss and thereby victimise the Claimant for having raised complaints of disability discrimination.


Evidence of iniquity


The Tribunal accepted that it was necessary for the Claimant to show strong prima facie evidence of iniquity. It also helpfully confirmed that legal advice to the effect that taking a certain course of action runs a risk of being held unlawful is not itself iniquitous.  However, advice that a certain course of action should be taken which may be unlawful “shades into iniquity”.


Slade J found that the facts of some discrimination may take advice on how to commit it into the category of iniquity.  In this case, the high threshold of a strong prima facie case was established as the discrimination was so unconscionable that it was contrary to public policy to preserve privilege and withhold this important evidence; where what was advised was not only an attempted deception of the Claimant but of the Employment Tribunal.  


This appears to be a significant development, inasmuch as iniquity had previously been understood to extend only to the likes of crime, fraud and dishonesty.  Indeed, courts have shown themselves reluctant to extend the concept indiscriminately, as privilege is not lightly to be overthrown.  In the past, for example, the courts have refused to extend the concept of iniquity to encompass the tort of breach of contract.  However, in finding that deception in disguising discrimination under a cloak of legitimate action is an iniquity for the purposes of excepting privilege, Slade J relied upon the comments of Norris J in the case of BBGP –v- Babcock & Brown that in the case law concerning iniquity, the wrongdoer had ordinarily gone beyond conduct which merely amounted to a civil wrong, and had “indulged in sharp practice, something of an underhand nature where the circumstances required good faith, something which commercial men would say was a fraud or which the law treats as entirely contrary to public policy.”


Concluding remarks


X –v- Y should interest employers seeking advice on how to terminate employment contracts in the context of an internal reorganisation and on insulating their actions from adverse legal consequences.  The case may impact on how legal professionals give their advice, although it should be emphasised that while this case will be of persuasive authority in Ireland, it has not yet been approved here and, indeed, may well be appealed in the UK.


It should also be remembered that the events leading to this judgment are highly unusual, including the element of deception in the case, which appears to have been a significant factor in Slade J’s decision.  Furthermore, in most instances an employee would have to be establish a strong prima facie case of iniquity without having seen the legal advice, which in the X –v- Y decision was something of a smoking gun.


It is certainly the case that this case widens the scope of the iniquity exception without providing clarity over where the boundary of iniquity lies.  The fact the Employment Tribunal had, at first instance, interpreted the advice differently, illustrates that the boundary between advice which avoids legal action and advice which evades legal action is not necessarily a clear one.


It will also be interesting to see whether, as this line of authority develops, it might be used by employers to seek copies of an employee’s legal advice which might suggest a course of action be engineered to pressurise an employer into a settlement.

Also contributed by David McCauley.

This document has been prepared by McCann FitzGerald LLP for general guidance only and should not be regarded as a substitute for professional advice. Such advice should always be taken before acting on any of the matters discussed.

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