1                 These guidelines areintended to assist managers in conducting without prejudice conversations with employees about the termination of their employment. ‘Without prejudice’ is a common law principle (i.e. non-statutory) which prevents statements/negotiations (written or oral), made in a genuine attempt to settle an existing dispute, from being put before a court or tribunal as evidence.

2                 The aim of the rule is to encourage parties to settle their disputes and avoid litigation.  The thinking behind the without prejudice rule is that if the parties are able to have a full and frank discussion without fear of incurring liability in the future, they are more likely to be able to settle their differences informally.

3                 However, just saying a conversation or document is ‘without prejudice’ does not necessarily mean that it can’t be disclosed in any future legal proceedings.

4                 The without prejudice rule only applies where there is an existing dispute between the parties.  This issue should be considered by any party considering having a without prejudice conversation.

5                 Section 111A of the Employment Rights Act 1996 offers similar protection to the ‘without prejudice’ principle in that it provides that any offer to terminate employment via a settlement agreement, or discussions held about it, cannot be used as evidence in any subsequent employment tribunal claim of unfair dismissal. Unlike the ‘without prejudice’ rule, it can apply where there is no existing employment dispute. However, the protection under Section 111A only applies where the claim is for unfair dismissal. The scope of protection is therefore narrow. Many employment tribunal claims involve combinations of complaints such as unfair dismissal and discrimination. The protection only applies to the evidence concerning unfair dismissal. It will not cover evidence concerning the allegations of discrimination. For this reason, many employers still chose to rely on ‘without prejudice’ discussions, even though for the protection to apply an existing dispute between the parties is required.

6                 In a dismissal situation (e.g. for poor performance) an employer may wish to expedite the process by offering a termination package on a without prejudice basis.  This is not without some risk however as an employer cannot know for sure, until they have made such an offer, how the individual will react.

7                 In some cases, for example where a senior employee is involved and/or the package being offered is very generous, the individual may be relieved to get things finalised as quickly as possible and may not be unduly concerned about going through a formal procedure.

8                 However, if the individual is, or becomes, hostile there is a risk of an unfair dismissal or discrimination claim.  In the worst-case scenario, an employer may find that the without prejudice rule is disapplied by a Court or tribunal so that their offer to dismiss could in turn be used as negative evidence against the employer.

9                 The without prejudice rule may be disapplied in cases involving discrimination and managers should never say or do anything in the course of without prejudice conversations or correspondence that may be considered discriminatory.

10              In most cases it will not be appropriate to have a without prejudice conversation without first having at least advised the employee that there is a disciplinary matter or other potential dismissal procedure to be considered or, preferably, starting the formal procedure by writing to the employee inviting them to a meeting.

11              In any employment relationship the parties’ bargaining positions are unequal and employers should take steps to try and balance this. For example, at the start of any without prejudice meeting explain what ‘without prejudice’ means and ask if the employee is willing to continue the conversation on that basis. In some cases, it may be appropriate to give the employee the opportunity to be accompanied at a meeting by a work colleague, if they wish, to help them feel less vulnerable (but again, this will depend upon the personalities involved).

12              During a without prejudice discussion the employee should never be told that if they do not accept the offer they will be dismissed as this could amount to duress. If there is improper behaviour by an employer in a pre-termination process, then it is possible that the without prejudice conversation could be relied on in future tribunal proceedings. There is much less risk of this if the employee is told that no final decision has been made regarding their dismissal but, if they are not interested in considering a settlement then the employer will simply continue with the relevant disciplinary or dismissal procedures.

13              If the employee asks for confirmation of the offer in writing this should be given but any correspondence should be clearly marked without prejudice and subject to contract.  A written offer leaves less room for dispute as to what was actually said during the without prejudice meeting.

14              Do not put pressure on the employee to make an immediate decision in relation to the settlement offer. ACAS recommends that an employee should be given a reasonable period of time to consider a proposed settlement agreement. What constitutes a reasonable period of time will depend on the circumstances of the case. As a general rule, a minimum period of 10 calendar days should be allowed to consider the proposed formal written terms of a settlement agreement and for the employee to receive independent advice, unless the parties agree otherwise.

15              A full note of any without prejudice meeting should be kept but clearly marked without prejudice.  If you are particularly concerned, you can ask the employee to sign a copy of the meeting note to confirm that it accords with their understanding of what was discussed.  Without prejudice correspondence should be kept separately from other correspondence to ensure that it is not inadvertently disclosed (as this would result in the without prejudice protection being lost).

16              Note that the protection of the without prejudice rule can be lost if it is waived by an employer.  This can happen inadvertently, so it is advisable to limit access to relevant documents to the smallest group possible and to be careful not to mistakenly disclose more widely by email or otherwise. In particular, without prejudice correspondence or documents should not be uploaded to any unsecured AI tool such as publicly available ChatGPT or AI features on personal, free to use email accounts as this will result in the without prejudice rule being lost.

This guidance note is intended to provide a brief summary and general guidance only and should not be used as a substitute for specific advice about your particular circumstances: specialist advice should always be sought.

Appendix 1
Without prejudice conversations – suggested approach

1                 It is advisable for there to be two company representatives present at the meeting in case of dispute after the event. If only one person conducts the conversation the third-party witness should either take notes at the meeting or make a note immediately afterwards. Any such notes should be clearly marked ‘without prejudice’ and kept separately from the employee’s personnel file.

2                 At the meeting you should start off by briefly informing the employee of the situation. For example, in a misconduct scenario you would explain briefly that allegations have been made against the employee and that a formal investigation is to be carried out. However, you should avoid asking for any detailed explanation from the employee at this stage or getting drawn into any detailed examination of the case against them. In a misconduct situation the employee could be told that they were to be suspended on full pay while the investigation is carried out and if the allegations are considered to be well founded the outcome could be dismissal.

3                 It is important to stress to the employee that no decision regarding their future has been taken at this stage and that this will only be done at the conclusion of the investigation and any subsequent disciplinary meeting.

4                 Following this the employee should be asked if they would be prepared to have a discussion on a ‘without prejudice’ basis. You should explain what this means - it could be described as a legal term for an ‘off the record’ discussion.

5                 If the employee agrees to continue the discussion on a without prejudice basis, they should be told that if they prefer, rather than going through the disciplinary process, the employer would be prepared as an alternative to discuss severance terms.  If the employee asks what the terms might be there is no problem in mentioning what is proposed. Apart from the monetary amounts to be paid you should also outline the other important elements of a severance deal (e.g. post-termination restrictive covenants, the provision of a reference, the repayment of any loans, etc).

6                 What is being offered is an alternative for the employee to consider - the Company is prepared to offer a settlement agreement under which the employee would leave the Company and waive any rights they may have to bring a claim in an employment tribunal. The key point to remember is that it should be the employee making the choice to discuss severance terms not the employer imposing the terms without any alternative.

7                 The option of entering into a settlement agreement with the Company is subject to the employee taking independent legal advice on the terms and effect of the settlement agreement. The Company would be prepared to contribute [£X] plus VAT towards obtaining this legal advice. The payment would be made directly to their solicitor’s firm upon them providing the Company with an appropriate invoice addressed to the employee as the client – provided that the employee agrees to enter into the settlement agreement.  If the employee decides not to sign the agreement, the Company will not make any legal fee contribution.

8                 It is a condition of the severance offer that these discussions remain completely confidential.

9                 If the employee refuses to have a without prejudice discussion, then they should be told that the investigation will be carried out in the usual way and they will be informed in writing of the outcome and whether the formal disciplinary procedure is to be invoked. [Go to step 12 below]

10              If the employee asks what will happen if they do not want to accept severance terms, they should be advised that the employer will continue with the investigation in the usual way following a fair and transparent process and, if following the investigation, there is a case to answer in respect of the allegations then the Company will begin a disciplinary process. If the employee decides not to agree to the settlement terms, this will have no impact on any decisions that may be reached during any investigation/disciplinary process.

11              The employee should be given a couple of days to think about things, if you are not providing them with written severance terms at the meeting these should be sent quickly after the meeting: they should be marked clearly without prejudice.

12              In a disciplinary situation, if the employee is being suspended, at the end of the meeting the employee should be provided with a letter saying they are suspended on full pay and benefits and outlining what they can/can't do during the suspension (e.g. contact customers, etc). This letter does not need to be marked without prejudice but should not contain any references to any severance terms discussed.

13              Once the employee has confirmed that the severance terms are agreed in principle, the employee should be advised that a settlement agreement will be drafted and sent to them.  The employee should be asked to book an appointment to see an independent solicitor (i.e. not one who has advised the employer on the matter) to discuss the settlement agreement as soon as possible.