How to have ‘Without Prejudice’ Conversations with Employees

For many employers, having a without prejudice discussion with an employee is a convenient way to try to resolve a difficult problem, whether it is dealing with an underperforming manager, a receptionist with a grievance, or a tricky redundancy issue. 

In practice, employers frequently make mistakes in initiating without prejudice discussions, potentially putting the business at risk. The following guidance assists and explains how you can ensure that your without prejudice discussions are properly conducted without prejudice, and what are the ￡risks if you don’t get it 100% right?

What do we mean by ‘Without Prejudice’?

‘Without Prejudice” can apply to any communication whether it is written or oral provided that it is made for the purpose of a genuine attempt to compromise a dispute. It won’t be admitted in evidence, meaning that it is ‘off the record’, and generally can’t be referred to by either party in any Tribunal or Court proceedings. The labelling of a conversation or document as “without prejudice” is not enough, it must be properly conducted without any prejudice.

Why is it important?

The purpose of the ‘without prejudice’ rule is to encourage parties to try to settle their disputes without fear that these discussions will jeopardise their legal position. It is intended to encourage parties to see if the dispute can be resolved outside the Court or Tribunal. If a conversation or document; which is intended to be without prejudice loses that protection, it will mean that it could be referred to in any future Tribunal or Court. Employers are usually reluctant for a Tribunal to be aware that they made offers to try to settle cases, as in some circumstances it can imply an acceptance of liability.

Get the timing right

A conversation will only be properly without prejudice where there is a pre-existing, genuine dispute between the parties. In BNP Paribas v Mezzotero the Employment Appeal Tribunal found that there was no pre-existing dispute when an employer proposed terms on which an employee would leave the business, in circumstances where an employee had brought a grievance relating to her return to work from maternity leave. The employee was therefore able to refer in Tribunal to the fact that she had been offered severance terms. 

In a later case, Framlington Group v Barnetston the Court of Appeal said that the key question was whether the parties had contemplated or might reasonably have contemplated litigation if they should not agree.

If employers start without prejudice discussions too early, they could potentially lose the without prejudice protection attaching to those discussions because there may be no actual dispute existing at that particular time. For example, an employee who lodges a grievance about his manager’s bullying and is then immediately offered a severance package would probably be able to refer to that without prejudice discussion at any Tribunal Hearing.

Be clear about the purpose of the discussion

One of the problems in Mezzotero was that the employee was ‘surprised’ by the without prejudice discussion. Employers need to ensure that they tell employees that they want to have a discussion on that basis, and to check that the employee both understands what this means, and also agrees to have a discussion on that basis. If they fail to do this, there is a genuine and real risk that this discussion can be referred to by the employee in any future proceedings. Ideally, it is a good idea for the employer to try to get the employee to suggest the without prejudice meeting if they can.

Watch out for ‘unambiguous impropriety’

In Mezzotero the Employment Appeal Tribunal said that even if there had been a dispute existing between the parties, the without prejudice protection would not have applied anyway because the conversation fell within the “unambiguous impropriety” exception. There is a rule that one party can give evidence about what the other has said in the context of without prejudice conversations if the exclusion of the evidence would act as a cloak for perjury, blackmail or other ‘unambiguous impropriety’. So, if an employer says to an employee ‘without prejudice, we don’t want you because you’re black’ or ‘without prejudice we just don’t want anyone who is gay working in our organisation’, that conversation would not be without prejudice, and would certainly be admissible in any future proceedings.

Keep an eye on the open record

It is easy to get swept away by the without prejudice conversations, assume that a deal can be done, and forget entirely about the open process. However, this can cause real problems if the employee ultimately decides not to take the deal. For example, in a redundancy situation if an employee is offered a package on a without prejudice basis at the first ‘at risk’ meeting, the employer may not bother to continue with the proper redundancy selection process, or look for suitable alternative roles elsewhere in the organisation. This can leave the employer very exposed if the employee does not agree to take the deal on offer. 

Employers should try to ensure that they protect the business’ position on the open record, by continuing to follow as much of the open process as possible until the without prejudice proposal is accepted and a deal has been signed.

How to approach a conversation with potential Settlement Agreements

Employers should be cautious about approaching pre-termination negotiations on the assumption that what is said will be excluded from evidence in an unfair dismissal claim. Fortunately, there is no reason why discussions of this nature need to be conducted in a way that would prejudice a future tribunal hearing. The fact that an employer has offered to negotiate an exit with an employee does not necessarily mean that the employee can resign and claim constructive dismissal or that an eventual dismissal will be unfair.

There are essentially two pitfalls that employers need to avoid.

·      The first is conducting the discussion in a way that indicates that the employer has no confidence in the employee's ability to do the job.

·      The second is the employer giving the impression that it has already made up its mind and that any performance management or disciplinary procedure will be a sham.

One option for employers is to begin the performance management, disciplinary or redundancy procedure before initiating a conversation about potentially reaching a settlement agreement.

The employer could then suggest an agreed exit package as an alternative to continuing with the procedure. The employee would already be aware that termination is a potential outcome of the procedure and may be more inclined to pursue a settlement. Beginning a formal procedure before holding the conversation about settlement may make it more likely that the conversation would be covered by the ‘without prejudice’ principle, as the employer could argue that there was a pre-existing dispute with the employee.

The employer may decide that it would be preferable to avoid any formal procedure and go straight to a discussion with the employee. Either way, the key for employers is to conduct the conversation in a way that keeps all options open but that allows the conversation to move forward and towards an agreed termination if the employee is open to that possibility.

The opening of such a conversation in a performance case could stress the employer's commitment to making the relationship work and confidence that the appropriate procedures and processes can achieve just that. The employer could ask the employee if they are similarly committed and prepared to engage with the employer to improve the situation. At this point, the employer could raise the possibility of an agreed termination as one option the employee could consider, and take the conversation from there if the employee seems receptive to the idea.

If the issue relates to discipline, the employer could raise a more general point with the employee about their attitude towards the organisation and his/her colleagues and whether or not they see a way forward. Again, the possibility of a settlement could be raised as one option to explore, without any suggestion that dismissal is the likely outcome of the disciplinary process.

The employer should state that the conversation is on a ‘without prejudice’ basis, and that it is covered by s.111A, and should explain what that means. It should ask the employee to agree that the negotiations will be kept confidential, other than from specified people, for example their legal advisers and close family.

Conversations of this nature are probably best conducted by HR professionals rather than line managers. In particular, they should not involve an individual who is likely to be directly involved in the potential disciplinary or performance improvement procedure.

There is no right to be accompanied at a pre-termination negotiation, although the Acas code recommends allowing a companion as ‘good practice’. Where a companion or union representative is already involved in the process it would make sense for any employer to include them in any discussions. Furthermore, the individual carrying out the negotiation may be inclined to take more care over their ‘choice of words’ if there is a companion or representative present, which could help to avoid any suggestion of improper behaviour.

Once the discussions have begun, it would be wise for the employer to set out the basis of its offer in writing. This will allow the employee to take appropriate advice and also give the employer an opportunity to emphasise that no decision has been taken at that stage. The Acas code suggests that, as a general rule, the employer should give the employee a minimum of 10 calendar days to consider the formal terms of a settlement agreement and obtain advice. The appropriate length of time will vary according to the nature of the negotiations taking place and the timetable for any approaching disciplinary hearing or performance review. Written communications should be headed "without prejudice" and "subject to s.111A of the Employment Rights Act 1996".

I hope this guidance provides some comfort in how to deal appropriately with employees to ensure that they leave an organisation with ‘dignity and respect’ and to minimise disruption and reputational risk; whilst ensuring employment law compliance.

Following the negotiations

If the employee does not accept the offer, the employer should continue with its formal disciplinary, performance improvement or redundancy procedure, ensuring that it follows a fair procedure regardless of what has been discussed during the negotiations.

The employer may want to utilise s.111A and argue that its pre-termination negotiations are inadmissible. However, if it adopts the approach set out above, even if the negotiations are admissible it should at least be in a position to defend an unfair dismissal claim founded on those negotiations, on the basis that it acted reasonably. More importantly, this approach should give the employer confidence that, if the conversation were to be used in evidence in a discrimination, breach of contract or automatically unfair dismissal claim, this would not damage its case.

If the employee does accept the offer, the employer should enter into the settlement agreement with the employee, ensuring that they have obtained independent advice on its terms

Conclusion

I hope this guidance provides some comfort in how to deal appropriately with employees to ensure that they leave an organisation with ‘dignity and respect’ and to minimise disruption to your business and limit reputational risk; whilst ensuring employment law compliance.

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 Lee Williams, Chartered MCIPD

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