How to Have a Without Prejudice Conversation

There are various workplace scenarios where an employer may want to have an off-the-record conversation with an employee. These could include, for example, where an employee has bought, or is threatening to bring, a claim against the employer before the tribunal or courts. However, more often than not, these types of conversations will be around bringing employment to an end and the terms on which an employee will leave.

The following guide for employers, managers and HR personnel looks at how to have a conversation without prejudice in the workplace, where it is important to remember that ‘off-the-record’ is not strictly a legal term. We also look at the difference between the meaning of ‘without prejudice discussions’ and ‘protected conversations’, and the various requirements that must be met for a conversation to be afforded the protection of the law.

 

What is a conversation without prejudice?

 

A conversation without prejudice is a discussion between an employer and employee, or between anyone acting on behalf of either party, including any line manager or HR personnel, or any legal representatives that may have been instructed, in the context of an existing workplace dispute. Where there is an existing dispute between employer and employee, the ‘without prejudice’ rule can prevent statements made in a genuine attempt by the parties to settle that dispute from being used as evidence in a tribunal or court.

The expression ‘without prejudice’ means that statements made during the course of any negotiations, either verbally or in writing, cannot be used against the party that made them in the context of any subsequent litigation. The ‘without prejudice’ rule is aimed at encouraging parties to settle their disputes without recourse to legal proceedings, by providing them with reassurance that anything said during any settlement attempts will not be used against them at a later date. In this way, if they feel safe that what they say will remain private if settlement cannot be reached, the parties are more likely to speak freely.

However, a workplace dispute must have been in existence at the time when any statements were made by the parties for the ‘without prejudice’ principle to apply, where earlier discussions cannot be retrospectively protected by a dispute being raised at a later stage.

 

When can without prejudice discussions be used?

 

There are several scenarios in which an employer may want to have without prejudice discussions with an employee. This could be where an employer is looking to terminate employment on mutually agreeable terms, rather than instigate a cumbersome disciplinary, capability or redundancy procedure. In any one of these contexts, the employer may prefer to avoid protracted internal proceedings, moving swiftly by reaching a settlement agreement instead, where any exit package will typically include a discretionary severance payment.

It could also be where the employment relationship has broken down, but there are insufficient grounds to instigate any formal process, such as for misconduct or poor performance, or where an employee wants to initiate a confidential discussion, especially when facing a formal process and they would prefer to explore agreed terms for their departure.

However, the use of without prejudice discussions can cover all types of legal claims and is not limited to discussions around termination of employment. This could include where a dispute has arisen in the workplace, and the employee has either lodged a claim before the employment tribunal or courts, or is threatening to do so unless agreement can be reached. There are no limitations associated with these types of conversations and so they can cover claims such as discrimination, automatic unfair dismissal and breach of contract.

In any one of the scenarios set out above, both parties are likely to want to ensure that any discussions undertaken between them are entirely confidential, and protected from disclosure in any future legal proceedings, especially if sensitive matters are concerned or the employee is senior. The without prejudice principle will provide both parties with the chance to speak frankly about the terms on which they would like the matter to be settled.

 

What is a protected conversation and how do these differ?

 

The ‘without prejudice’ principle derives from the common law, whilst the right to confidentiality when conducting a protected conversation derives from statute, as set out under s.111A of the Employment Rights Act (ERA) 1996.

Under s.111A of the ERA, any evidence from either party of pre-termination negotiations will be inadmissible before a tribunal in any proceedings for ordinary unfair dismissal. In contrast, the ‘without prejudice’ principle will prevent statements, either verbal or written, made in a genuine attempt to settle an existing workplace dispute, from being put before a court or tribunal as evidence against the interests of the party who made it.

The purpose behind the ‘without prejudice’ principle is to encourage the parties to a dispute to speak freely during any settlement discussions, without worrying that any concessions made will subsequently be treated as admissions, in this way potentially harming their legal position if the workplace dispute cannot be resolved. A protected conversation is an extension of this principle, allowing the parties to engage in off-the-record discussions about terminating the employment relationship in the absence of any dispute. As such, the rules around pre-termination negotiations are designed to protect the parties from any settlement discussions being admissible in the context of any claim for unfair dismissal.

The s.111A statutory provision allows greater flexibility in the use of pre-termination negotiations between an employer and employee as a means of ending the employment relationship where, without an existing dispute, any ‘without prejudice’ confidentiality would not apply. This essentially means that protected conversations run alongside the more general ‘without prejudice’ principle, such that even absent any workplace dispute the parties may still explore the possibility of a settlement agreement in the knowledge that their conversations cannot be used to undermine their case before a judge.

Additionally, in circumstances where agreement cannot be reached to terminate employment on mutually agreeable terms, and the employee is dismissed, the content of any discussions to attempt to settle any unfair dismissal claim without recourse to legal proceedings can still be classed as ‘without prejudice’.

 

How should a conversation without prejudice be conducted?

 

The way in which a conversation without prejudice should be conducted will depend upon the context in which the need for any discussions has arisen. For any conversation around an existing dispute, an employer should ask the employee at the outset of that conversation to confirm that they are happy to speak on a without prejudice basis and explain to them what this means. If the employee does not agree to a without prejudice discussion, the employer should either be prepared to speak on an open basis or to rearrange the meeting.

It is also important to ensure that a clear written record of what has been agreed between the parties is kept, not only in relation to any terms of settlement of an existing workplace dispute, but also the agreement to have a conversation without prejudice in the first place.

Equally, in relation to any conversation around terminating employment, an employer should ask the employee at the outset of that conversation to confirm that they are happy to speak on a protected basis and explain what this means. If the employee does not agree, the employer should again be prepared to speak on an open basis or rearrange the meeting.

However, for any settlement offers and discussions relating to an existing workplace dispute or termination of employment to be protected, each party must act ‘properly’ at all times, otherwise run the risk of losing the protection afforded to them under common law or by virtue of s.111A. As such, so as to ensure that any settlement discussions or pre-termination negotiations remain confidential, there must be no ‘improper behaviour’ associated with either the offer or the discussions. Improper behaviour could include, for example, putting undue pressure on an employee, such as threatening to dismiss them for refusing to agree to a settlement offer or not giving them sufficient time to consider any offer made.

In the event that the matter comes before a tribunal or court in the context of any claim, and a finding is made of improper behaviour by the employer, anything said or done during settlement discussions or pre-termination negotiations will only be inadmissible as evidence in that case to the extent that the tribunal or court considers it just. What constitutes improper behaviour is for the judge to decide, based on the facts of each case, but will include any behaviour regarded as ‘unambiguous impropriety’. This is because it would be wrong to allow a party to keep matters confidential where they have behaved so inappropriately that the tribunal or court should be made privy to this.

If an employer, or anyone on their behalf, acts improperly during the course of settlement discussions or pre-termination negotiations, by law, the conversation will no longer be protected in the context of any workplace claim, or in the context of any claim for unfair dismissal or any constructive dismissal claim where the employee forcibly resigns.

 

Best practice advice

 

When entering into conversations without prejudice, by taking on board the following best practice advice, this can not only help to facilitate a smooth negotiation process, but ensure that any concessions or admissions will not be admissible at a later date. In this way, by having the freedom to openly discuss the terms upon which an existing dispute or termination of employment can be concluded, this can maximise the chances of a successful settlement agreement and minimise the possibility of litigation at a later date.

Some of the best practice advice that employers should follow includes:

 

Obtain the employee’s agreement

When engaging in without prejudice discussions or pre-termination negotiations, employees are not obliged to enter into conversations about the terms of settlement of any workplace dispute or any possible agreed exit on termination of employment. Equally, they do not have to accept any terms proposed, where there may be both offers and counter-offers from either side. The parties may even accept at the end of these discussions that agreement is not possible. As such, the employer should always first get the employee’s agreement to talk on a without prejudice or protected basis.

 

Do not rush the employee

The employee must be given sufficient time to consider any proposals made to them by the employer, for example, an offer of compensation to settle a workplace dispute or an offer of a discretionary severance payment. The employee should be given a reasonable length of time to consider any proposed settlement, although what constitutes ‘reasonable’ will depend on all the circumstances of the case. Generally, unless otherwise agreed, an employer should allow the employee at least 10 calendar days to consider the terms and to take independent legal advice.

 

Ensure that any settlement agreement is professionally drawn up

When deciding on the terms and precise wording to be included in any settlement agreement, legal advice should always be sought. This is so that an experienced lawyer can draft the terms of the agreement, ensuring that the employer is adequately protected from any future claims. For example, in the context of without prejudice discussions to settle a workplace dispute, the agreement must record that any offer of compensation is in full and final settlement of all claims. Equally, in the context of pre-termination negotiations, in return for financial payment or any other incentive, the employee must agree to waive their right to bring a claim for unfair dismissal on termination of their employment.

 

Ensure that any settlement agreement meets the requisite requirements

In the context of pre-termination negotiations, there are strict rules relating to settlement agreements, not least to be enforceable the agreement must satisfy certain statutory requirements. For example, to be legally valid, the employee must have received advice from a qualified independent advisor on the terms and effect of the proposed agreement in the context of settling any unfair dismissal or other claim arising out of the employment relationship.