Mr Morgan was a teacher at Wanganui Collegiate School. When breaking up a fight between two students he placed one of them in a headlock. During the disciplinary process that ensued, Mr Morgan admitted that his actions were serious misconduct, but thought that they were at the lower end of seriousness.
 
The School’s lawyer phoned Mr Morgan’s lawyer during this process. The lawyers agreed to speak on a without prejudice basis. Though there is some dispute around what was said, effectively the school’s lawyer advised that the board considered that Mr Morgan’s actions were serious misconduct, that the school had a statutory duty to report such a finding to the Teacher’s Council. As an alternative to the disciplinary process continuing, Mr Morgan  was given the opportunity to  resign. He  declined that opportunity and was subsequently dismissed for serious misconduct.
 
Mr Morgan claimed (amongst other things) that the without prejudice conversation should not remain confidential as:

1. It did not relate to a formal dispute / litigation;

2. It should be subject to scrutiny as the conversations were evidence of a constructive dismissal; and

3. It should be subject to scrutiny as it constituted blackmail.

The Court of Appeal dismissed all three arguments. Such confidential communications are available if “there exists a serious employment relationship problem that could give rise to litigation the result of which might be affected by an admission made during negotiations”. Naturally this includes situations where misconduct or serious misconduct has been admitted, but disciplinary action not yet decided. The Court also used a contractual basis to support this decision – if the parties agree that the conversation is to be confidential, then that agreement cannot later be withdrawn.

The Court was unimpressed with the constructive dismissal and blackmail arguments. The communications were viewed as a good faith attempt to assist Mr Morgan by offering to accept his resignation and avoiding the necessity to report his serious misconduct to the Teacher’s Council. There was no threat, simply a statement of the statutory requirement.

Using without prejudice negotiation

Jackson Russell’s Employment Team regularly uses confidential communications (along with  other dispute resolution tools) to swiftly and cost-effectively solve problems between employers and employees without going to court. For employers, it can be an effective way of negotiating the exit of a troublesome employee and avoiding a potential personal grievance. For an employee it can achieve a settlement or reinstatement where an employer has breached their duties to you.
 
It is important to note that Without Prejudice communications are not free license to breach substantive or procedural duties in the employment relationship. In such a case, the Court may be prepared to take the communications into account, leaving you in a compromised position. However, when used strategically and correctly they can avoid significant time, stress and financial cost.
 
If you would like further information about resolving an employment dispute, please contact your usual Jackson Russell advisor or our Employment Law specialists.