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 if a grievance is raised by an employee, it 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.

If you are issued with a settlement agreement, or an offer of settlement, it will have the term “without prejudice and subject to contract” 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 (compromise) agreements and conversations.

What is a Without Prejudice Conversation?

Simply, without prejudice means that generally any conversations had during a negotiation phase, genuinely held to attempt to settle a dispute between an employer and employee, either in writing or verbal, cannot be used in evidence against the party that made the comments in any court or tribunal proceedings.

What’s the Difference between Without Prejudice and Protected Conversations? 

While without prejudice rules only apply where there is a dispute in some circumstances, an employer may wish to discuss the end of employment even if there has been no dispute.

In these situations, employers and employees can have “off record” conversations, often referred to as protected conversations, where they can discuss such topics with the same legal effect as a without prejudice discussion.

There are exceptions to this however, a protected conversation is not covered where there is any complaint of any discrimination, whistleblowing, health and safety reports or breach of contract which has been made.

If either party engages in any “improper behaviour” during the negotiations, then the confidential nature of these discussions may be considered as evidence by a court or tribunal. This could arise where an employee is not given enough time to consider the offer (ACAS advises in their guidance that this should be 10 days), or where there is any discriminatory treatment for example.

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 and separate from any formal “on the record” communications regardless of the final outcome.

The term “without prejudice” when used correctly, 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 until a legally binding agreement is in place)
• 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 usually to be treated as unofficial, confidential and “off the record”.

Generally, 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 exceptions. It may also be referred to during a costs hearing where the communication is marked “without prejudice save as to costs”.

There may be grey areas between what is and what is not considered to fall under the category of without prejudice. 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 usually cannot be legally used to “prejudice” either party’s position in any subsequent legal proceedings.

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 or engage in the conversation where the contents of a meeting were not shared beforehand, 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. 

Our settlement agreement calculator can offer an estimate of a potential compensatory sum.

The calculator assumes the following:

• You have been dismissed within the last 3 months
• You have 2 or more years of service with your employer
• You have been unfairly dismissed or unfairly forced to resign
• You have not found a new job
• You are not claiming to have been discriminated against or are a whistle-blower
• You have not received statutory redundancy pay

Please note that your settlement agreement payment will also be subject to tax and NI (National Insurance), and so you should keep this in mind when reviewing your estimated figures.

Accepting a Without Prejudice Offer

If you receive a letter headed “without prejudice” from your employer, you may want to consider whether or not this is a genuine attempt to resolve the dispute.  

We would recommend that you seek legal advice at this stage.  

Should you feel it is not a genuine attempt, you may reply to the letter either asking your employer to agree that the letter is not without prejudice, or to ask for an explanation as to why they think it is. Smith Partnership can help draft this letter on your behalf, or liaise directly with the employer on your behalf. 

Do I Need Employment 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 early on, you may fail to achieve a fair settlement that's focused on 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 Solicitor 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 08000 32 32 02, email us directly via  sa@smithpartnership.co.uk or complete our contact form. 

Unlike many other legal firms, we offer an 8am to 8pm contact service, available Monday to Friday, to ensure you have accessible points of contact when you need it most. 

Whether you need a phone call or prefer email contact, one of our settlement agreement solicitors can be there for you in your time of need, often providing advice in 24 hours from your initial contact.