Employers often ask how to use the ‘without prejudice’ rule and the new rules that relate to ‘pre termination discussions’ to explore settling disputes or agreeing a termination of employment.
Without Prejudice – what does it mean?
The ‘without prejudice’ rule enables parties to explore the possibility of an agreed settlement, safe in the knowledge that if agreement cannot be reached, then the information exchanged cannot later be relied upon by anyone in a subsequent claim.
However, people often write ‘without prejudice’ on correspondence without understanding what it means and when the ‘without prejudice’ rule applies. Often the term is used when the person who is writing senses that what they are writing may be prejudicial to them in the future and hopes to avoid this effect. Tough luck, because you cannot simply remove a prejudicial effect by writing ‘without prejudice’ on your letter! That would be like crossing your fingers behind your back when lying: it does not work!
The rule can only be used when there is a dispute between two parties and the information being conveyed is part of a genuine attempt to resolve that dispute. So, offering a sum of money to compromise a claim will be inadmissible if the attempt to compromise fails. However, be warned: if it is argued successfully that no dispute yet existed then the rule will not apply. Note also that it is only information that is conveyed in an attempt to reach settlement that is protected.
Pre-Termination Settlement Discussions
New Section 111A Employment Rights Act 1996 makes negotiations before the termination of employment inadmissible in any subsequent claim. An employer who is considering dismissing an employee can open a dialogue to explore an agreed termination without prejudicing its defence to an unfair dismissal claim if agreement is not reached.
The difference between this and the ‘without prejudice’ rule is that there does not have to be an existing dispute for the rule to apply. Sounds very useful doesn’t it? Well, it can be, but careful: there are some pitfalls for the unwary.
Firstly, S.111A only applies to ‘offers made’ or ‘discussions held’ before termination with a view to reaching termination by agreement. So the information disclosed is protected insofar as it is an attempt to agree termination: it is not a licence to have a wide ranging discussion covering other areas.
Secondly, it only covers ordinary unfair dismissal claims: not cases involving alleged discrimination or cases where automatic unfair dismissal is alleged (only alleged: not in fact proven). This is problematic, because most good employers will not know they are going to face claims of this nature until after they have dismissed!
Finally, it does not cover conduct that the Tribunal considers ‘improper’. The problem here is that by the time the Tribunal has considered whether or not information was disclosed was improper, it will already know what was said!
A well advised employer can take advantage of these rules to explore settlement of existing claims or potential claims, but it is essential to make sure that one or both of the rules apply before trying to rely upon them.