Without Prejudice Conversations and Settlement Agreements

Without prejudice conversations are used by many employers as a means of resolving an employment issue or dispute. Issues regarding underperformance in the workplace, gross negligence, redundancy and grievance may all fall under this category. Without prejudice conversations are most commonly used to allow for the “free” negotiation (or “off the record” negotiation) of an employee’s exit package, often as part of a settlement agreement or in the wake of a looming employment tribunal dispute.

It has become commonplace within the workplace for legal documents to come with the term “without prejudice” attached. Before you engage in any verbal or written dialogue with your employer or other members of staff, it is vital to understand what exactly without prejudice conversations entail and what it might mean for you.

In this article, we’ll discuss all there is to know about without prejudice settlement agreements and conversations.

What Does “Without Prejudice” Actually Mean?

Without prejudice conversations (also known as protected conversations) may well seem daunting to employees unfamiliar with employment law. Having said that, the essence of without prejudice conversations and documents is that they offer a means of allowing for negotiations to remain confidential regardless of the final outcome. 

The term “without prejudice” conveys the following rules when used in regards to any document:

  • It cannot be used as evidence in any court case or tribunal

  • It cannot be taken as the signatory's final word regarding the subject at hand (e.g. this information is not final and is subject to change)

  • It cannot be used as a precedent

This rule was essentially designed as a means of preventing documents and verbal/written exchanges from being presented to an employment tribunal as evidence. The benefit of having this rule in place is that it allows for parties to make a sincere attempt to settle a dispute without having to fear the legal repercussions of being "quoted".

A without prejudice conversation can be considered a legal shield used by individuals and organisations to protect any information said in it being disclosed to third parties or declared during an employment tribunal. If a conversation or document has “without prejudice” attached to it, then it is to be treated as unofficial, confidential and “off the record”.

No information disclosed during the conversation that makes up a without prejudice settlement agreement can be discussed after the fact. Once a settlement agreement is signed, it also becomes a legally binding contract that is fully confidential.

Are There Any Exceptions?

Whilst the vast majority of without prejudice conversations that have been conducted in the right way will need to remain confidential at all times, there are a few exceptions to this rule. Without prejudice information can be disclosed in very specific and necessary circumstances, as defined by law.

Cases in which misrepresentation, fraud or undue influence are involved will often allow for the without prejudice rule to be broken, as information may need to be disclosed in order to uphold legal justice. Circumstances in which there is evidence of blackmail, perjury or any other clear impropriety are another exception.

There may be grey areas between what is and what is not considered to fall under the category of confidentiality. In practice, many employers will frequently initiate without prejudice conversations in the wrong way, leaving an air of ambiguity regarding the exchange. In such a case, enlisting the help of an experienced settlement agreement solicitor can help remove ambiguity and establish the most suitable course of action.

When Are Without Prejudice Conversations Appropriate?

Without prejudice conversations can be used in a variety of delicate or potentially volatile situations. For example, they can be used when attempting to resolve an issue or dispute which revolves around a grievance, underperformance or any other issue relevant to the workplace. Whatever the case, their primary function is to allow employers and employees to freely discuss the terms of an exit package.

Businesses will often make use of without prejudice conversations to discuss the extent of compensation offered as part of a settlement agreement. If a dispute cannot be settled, anything said during this conversation cannot be legally used to “prejudice” either party’s position. 

Things to Remember During Without Prejudice Conversations

For the information disclosed as part of a without prejudice conversation to remain entirely confidential, there are certain legal formalities which must be adhered to. Employers and employees alike often fail to consider these formalities adequately, paving the way for ambiguity to seep into settlement agreement negotiations.

If you do decide to take part in a without prejudice conversation, then it is highly recommended to receive confirmation of this in writing. If the agreement to speak without prejudice is only made verbally, then it could be difficult to prove this in court if the other party then tries to say it was not without prejudice. In such a case, both parties are almost entirely reliant on trust between one another.

There is no legal obligation to attend a without prejudice conversation with your employer. It also cannot be held against you in any capacity if you do not attend, either as part of an employment tribunal or in the workplace. Some individuals may feel unable to attend such a meeting if their employment relationship has broken down so severely that it would feel intensely stressful or inappropriate to do so. 

As part of the meeting, your employer will most likely be looking for you to sign a settlement agreement to confirm that you no longer wish to bring a claim against the organisation through the employment tribunal.

Depending on the specifics of your situation, a fair exit package will often include a financial payment in lieu of your notice period. You may also commonly expect to receive an ‘ex gratia’ payment, which is often tax free up to the first £30,000.

Do I Need Legal Support?

If a settlement agreement is offered during negotiations with your employer, then it is important not to rush into any decision. Reviewing the offer alongside a specialist legal professional will help you to fully understand the implications of the settlement agreement and help you to negotiate the best possible deal.

Without the right legal advice, you may fail to achieve a fair settlement that's focused around your needs. Instead, your settlement agreement may unfairly favour employers with a more extensive understanding of employment law or with better access to legal support. It is, in any event, a legal requirement for a settlement agreement to be signed off only after the employee has obtained independent legal advice on its contents.    

Contact our Employment Team

Smith Partnership's settlement agreement solicitors are on hand to offer first-rate legal counsel and representation, ensuring that you achieve the best result possible. Simply give us a call on 0330 123 1229, email us directly via info@smithpartnership.co.uk or complete our contact form.