A without prejudice discussion can help employers explore settlement with an employee or former employee, but it must be used correctly.
Employers sometimes want to resolve a workplace dispute without a tribunal claim, formal grievance or lengthy internal process. A without prejudice discussion may allow both sides to speak more openly about settlement, but the protection is not automatic in every situation.
If the employer gets the process wrong, comments made during the discussion may become damaging later. That is why employers should understand the limits before starting the conversation.
What is a without prejudice discussion?
A without prejudice discussion is a conversation or written communication made in a genuine attempt to settle an existing dispute.
The purpose is to allow both sides to explore settlement without those discussions usually being used as evidence in court or tribunal proceedings.
However, the key point is that there normally needs to be an existing dispute. If there is no dispute yet, the without prejudice label may not provide the protection the employer expects.
When can employers use a without prejudice discussion?
Employers may consider a without prejudice discussion where there is already a clear dispute with an employee or former employee.
Examples may include:
- an employee has raised a formal grievance
- there is a threatened employment tribunal claim
- ACAS early conciliation has started
- there is a dispute about dismissal
- there is a dispute about redundancy, pay, notice or holiday
- there are allegations about discrimination, whistleblowing or breach of contract
The discussion should be aimed at settlement. It should not be used as a way to pressure an employee, avoid a fair procedure or disguise an ordinary management conversation.
Without prejudice discussion and protected conversations
A without prejudice discussion is not the same as a protected conversation, although the two ideas can overlap.
The without prejudice principle usually applies where there is an existing dispute and the parties are genuinely trying to settle it. ACAS explains that some settlement discussions are legally protected under the without prejudice principle, meaning they cannot be used as evidence in an employment tribunal or court.
Protected conversations under section 111A of the Employment Rights Act 1996 are different. ACAS guidance explains that they may apply to settlement agreement discussions in ordinary unfair dismissal cases, even where there is no existing dispute.
Employers should not assume that one label protects every conversation. The type of claim, the timing of the discussion and the behaviour of the employer all matter.
Risks if there is no existing dispute
One common mistake is using the words “without prejudice” when there is no real dispute. Writing those words at the top of an email does not automatically make the content protected.
For example, if an employer simply wants to remove an employee because the relationship has become awkward, but there is no grievance, no claim and no clear dispute, a without prejudice discussion may not be protected.
In that situation, the employee may later argue that the conversation shows the employer had already decided to dismiss them or wanted them out of the business.
Employers should take advice before relying on without prejudice protection where the dispute is unclear.
Be careful with improper behaviour
Even where a without prejudice discussion would usually be protected, improper behaviour can cause serious problems.
Employers should avoid threats, intimidation, discrimination, harassment, aggressive language, misleading statements or unreasonable pressure. The discussion should be professional and focused on settlement.
ACAS guidance on settlement agreements says protection under section 111A will not apply where there has been improper behaviour. The ACAS Code also explains that improper behaviour can include behaviour that would be regarded as unambiguous impropriety under the without prejudice principle.
How to prepare for a without prejudice discussion
Before starting a without prejudice discussion, employers should understand the facts, documents and risks.
Preparation should include:
- identifying the existing dispute
- reviewing relevant documents
- checking whether any formal process is underway
- assessing possible legal claims
- deciding who should lead the discussion
- considering whether ACAS is involved
- checking any insurance position
- deciding what settlement terms may be offered
The employer should also be clear about the objective. A settlement discussion should not be improvised by a manager who has not been briefed.
What should employers say?
The employer should keep the discussion calm, factual and limited to settlement. It should explain that the discussion is intended to explore whether the dispute can be resolved by agreement.
The employer should avoid saying that dismissal is inevitable unless the employee accepts the offer. It should also avoid criticising the employee in emotional or excessive terms.
Where a settlement payment is proposed, the employer should explain what the payment covers and whether notice, holiday pay or other contractual sums are separate.
Any offer should normally be confirmed in writing and marked appropriately, but the wording should still be careful. Labels alone do not fix poor content.
Settlement agreement or COT3?
If the parties reach agreement, the terms must be recorded properly. Depending on the circumstances, the outcome may be documented in a settlement agreement or, where ACAS is involved, a COT3 agreement.
A settlement agreement can be used to settle a dispute or legal claim, and it can also be used to end the employment relationship. ACAS guidance explains that settlement agreements can be used for both purposes.
Employers should make sure the document properly covers the claims being settled and the payments being made. Poor wording can leave room for later disagreement.
Practical checklist for employers
Before holding a without prejudice discussion, employers should ask:
- Is there an existing dispute?
- Is the discussion genuinely aimed at settlement?
- Could the employee bring discrimination or whistleblowing allegations?
- Has the employer reviewed the facts and documents?
- Who should lead the discussion?
- What offer, if any, is being made?
- Will the employee have reasonable time to consider the proposal?
- Should the discussion also be framed under section 111A?
- Is legal advice needed before the meeting?
Getting without prejudice discussions right
A without prejudice discussion can be useful where an employer wants to resolve an existing dispute sensibly and commercially. Used properly, it can help the parties reach agreement without escalating matters further.
Used badly, it can create evidence of pressure, unfairness or a predetermined decision. Employers should therefore avoid casual conversations and make sure the legal basis for the discussion is understood before it starts.
Employers Law helps employers manage without prejudice discussions, settlement agreement discussions and workplace disputes. If you are considering settlement talks, early advice can help reduce the risk of mistakes.
For practical help with settlement discussions, visit our settlement agreement discussions page. For wider support, Employers Law also provides free employment law advice for employers across a full range of workplace issues.