What does it mean to have a without prejudice conversation with my employee?

One of our recent newsletters featured a case that examined the “without prejudice” rule and whether a conversation between and employer and employee regarding a potential settlement were protected by this rule. Though in that case the tribunal found the conversation was protected, not every conversation which is labelled “without prejudice” will be. This article discusses what it means when a conversation is “without prejudice”, when the rule applies, and some exceptions to the rule.

Without prejudice rule

Where a communication is made “without prejudice”, this means that the parties to that communication will not be able to subsequently rely on what was said as evidence in future litigation. The purpose of the without prejudice rule is to encourage parties to settle an existing dispute without resorting to litigation, which can be costly and time consuming. The without prejudice rule allows parties to have honest and frank conversations without fear that what they say will later be used against them in court.

Simply stating that a conversation is “without prejudice” or writing “without prejudice” on a letter will not necessarily guarantee that the correspondence will be protected. The rule will only apply where there was an existing dispute between the parties. This will be a question of fact and will depend on the surrounding circumstances. That an employee has raised a grievance does not necessarily mean that there is an existing dispute. The communication must also be a genuine attempt to settle the dispute. Finally, the without prejudice rule must not be used to cover up any “unambiguous impropriety.”

Employers should also be aware that correspondence which meets the above criteria may be protected by the without prejudice rule, even if they have not written “without prejudice” on the letter or stated it at the beginning of the conversation. However, it is still advisable to explicitly state the correspondence is without prejudice, to avoid any ambiguity.

Unambiguous impropriety

A party may be permitted to admit evidence of what was said in a without prejudice conversation where the other party is attempting to use the rule as a cloak for perjury, blackmail or other unambiguous impropriety. For example, the rule will not protect a party who admits that their claim is a sham, but persists in bringing the claim as a way to put pressure on the other party to settle a separate dispute. When deciding whether this exception applies the court or tribunal must be satisfied that the evidence establishes unambiguous propriety. This is a high threshold and cases where this exception applies are rare.  

Other exceptions to the without prejudice rule

The courts have recognised a number of other exceptions to the without prejudice rule. These include the following:

• Where evidence of the without prejudice communications is needed to show that a concluded agreement between parties should be set aside on the grounds of misrepresentation, fraud, or undue influence. This exception may also apply where a party seeks to rely on without prejudice communications prove there was no misrepresentation or fraud and that the agreement consequently should not be set aside.
• When evidence of the negotiations are needed in order to properly interpret a settlement agreement.
• To explain why there has been a delay in proceeding with a claim.
• To help the court determine the issue of costs. In this case the communications should be marked as “without prejudice save as to costs.”

Pre-termination negotiations

Where the without prejudice rule does not apply, correspondence may still be protected if it is a pre-termination negotiation. A pre-termination negotiation is “any offer made or discussions held, before the termination of the employment in question, with a view to it being terminated on terms agreed between the employer and the employee.” Unlike the without prejudice rule, there does not need to be an existing dispute for the pre-termination discussions to be protected. However, while the without prejudice rule can apply to any claim in an employment tribunal, the protection afforded to pre-termination negotiations only applies to cases of ordinary unfair dismissal. It would therefore not apply to cases where the employee is claiming automatic unfair dismissal, discrimination, or breach of contract.

If you have a dispute with an employee and need some advice on how to move forward, or if you need help negotiating a settlement agreement, one of the solicitors in our Employment Team will be happy to assist you. Contact us at employment@warnergoodman.co.uk or call 023 8071 7717.