Privilege and discrimination: can legal advice be used in evidence against an employer?

Last year's Employment Appeal Tribunal decision in X v Y was enough to send shivers down the spines of businesses and employment lawyers alike.   

In that case, the EAT decided that legal advice privilege did not apply to legal advice given to the employer about the possibility of an employee (who had already raised a discrimination claim while still employed) being made redundant as part of a wider process.   The reason was that the EAT interpreted the email as advising the employer to use the redundancy process as an opportunity to remove a troublesome employee by way of a sham redundancy.  The EAT's view was that not only would that be unlawful victimisation, but it would also be akin to a fraud, and so legal advice privilege had been forfeited.   The email therefore could be relied on by the employee as evidence in his Employment Tribunal claim. This decision caused some alarm about the apparent width of this exception to legal advice privilege. The facts of the case also raised eyebrows: the employee had been sent the email anonymously by post and claimed to have overheard the employer's external lawyers gossiping about the case at a pub. 

Last month, the Court of Appeal took a different view from the EAT.  It ruled that the email was the sort of advice which employment lawyers give "day in, day out" and was not advising the employer (now identified as Shell) to act in an underhand or fraudulent way.  As a result, the email was subject to legal privilege. 

The Court of Appeal's decision will cause employment lawyers to breathe sighs of relief.  It reaffirms the right of businesses to seek advice on courses of action which may give rise to potential claims.  Unfortunately, it's still not entirely clear where the line is drawn between legitimate advice on a legally risky course of action and 'underhand' advice which forfeits legal privilege.  Indeed, UK law surrounding legal privilege is increasingly complex and arguably in need of reform.  In the meantime, lawyers and businesses alike should take great care when handling sensitive employee issues and should definitely avoid discussing the juicy details over a few pints – you never know who might be sitting at the next table.