The Without Prejudice rule prevents a proposal made in a genuine attempt to settle an existing dispute from being used against the party making the proposal if an agreement is not reached.

The proposal can be in writing or verbal.

So, if we are in dispute with an employee, and we put a proposal to them, that they leave on agreed terms, but we don’t reach agreement, the employee cannot refer to our proposal in any later claim they might want to bring.

For example, they might resign and claim constructive unfair dismissal and try to argue that our proposal showed that we wanted them out.

Or they might want to claim that our proposal was an act of disability discrimination, perhaps because the dispute related to performance issues and those issues were caused by their disability.

But, our Without Prejudice proposal is fully protected and cannot be used against us provided there is a dispute, provided our proposal is an attempt to settle that dispute, and provided there isn’t any serious wrongdoing on our part in relation to the proposal – e.g. blackmail or using discriminatory language.

Without Prejudice proposals are a very useful tool for employers.

Obviously, the aim is for the employee to agree to our proposal and sign a Settlement Agreement, but we need to protect ourselves in case agreement isn’t possible

Dispute

The key issue for employers, when deciding if we can use Without Prejudice, is working out – is there a dispute?

If we put forward a proposal and there is no dispute, even if we mark the email/letter “Without Prejudice”, it will not be protected and can be used against us.

So – what is a dispute? Thankfully, it is a low bar.

There is a dispute where there is an issue, of some sort, between the parties, which may result in a claim if it is not resolved.

For example:

If we have had informal conversations with the employee about problems with their performance – there will be a dispute

If we have had conversations with the employee about high and unsatisfactory levels of absence – there will be a dispute

There can be a dispute even if the conversations with the employee have been amicable

If there is no existing dispute, but we want to have a Without Prejudice discussion, we need to generate a dispute – by raising our concerns with the employee

Then, having created a dispute, we can put forward a Without Prejudice proposal

How and when can we use Without Prejudice in different situations in the workplace?

We may want to avoid having to go through a process, or bring a process to an end, by making a Without Prejudice proposal

That process might be redundancy, health, disciplinary, performance or grievance

The aim will be to do a deal with the employee and get them signed up to a Settlement Agreement

Disciplinary situations

In most disciplinary situations there will be a dispute

So, when would be the best time to have the Without Prejudice discussion? It’s up to you.

One option is at the end of the disciplinary hearing but before you communicate the decision.

Explain that, looking at the evidence, it is likely the decision will be to dismiss.

However, before a final decision is made, we would like to talk on a Without Prejudice basis We can offer them an alternative to dismissal, an agreed parting of the ways.

Go away and think about it – you have 48 hours. We will hold off making a final decision until then.

Hand the employee a letter setting out the offer clearly marked Without Prejudice and Subject to Contract.

If they agree we send them a Settlement Agreement

If they don’t agree we write to confirm dismissal

Or, we can have the Without Prejudice discussion right at the start of the process – before we invite them to a disciplinary hearing

We run through the allegations with them and explain that the next step is a disciplinary hearing

We then move into Without Prejudice mode and offer them a severance package as an alternative to a disciplinary hearing

We give them a Without Prejudice letter

If we reach agreement we send them a Settlement Agreement

If don’t reach agreement we send them an invitation to a disciplinary hearing

Performance

Same process as above

Redundancy

We don’t actually need to use Without Prejudice here We can make a proposal openly

At the initial meeting with the employee we can explain the redundancy proposal and the next steps in the consultation process

Hand them a letter confirming that and setting out their financial entitlements

In that letter, we can offer an enhanced redundancy payment, with the sole proviso being that they sign a Settlement Agreement

If the enhancement is reasonable, and we draw attention to it, there is a good chance the employee will want to cut short the process, sign a Settlement Agreement and take the enhancement.

We can do it as a separate Without Prejudice conversation/letter if we prefer and if we feel we can push them into accepting the offer by threatening to withdraw it if it isn’t accepted quickly.

There is probably a dispute if we have told them we are proposing to terminate their employment

But, that sort of aggressive approach really isn’t necessary

Health

Lots of short term absences?

If we have had conversations, even if informal, to discuss our concerns and that there might need to be formal action, there is likely to be a dispute

So, we can make a Without Prejudice offer Long term absence?

If we have had conversations, about when they might be able to return to work, perhaps raising concerns about difficulties in covering their work and mentioning there might need to be a formal meeting to discuss their future employment, there is likely to be a dispute

So, we can make a Without Prejudice offer

Also, we can word our letters in such a way that, even if they are not protected by the Without Prejudice rule, we come across as sympathetic and should be able to avoid criticism.

Grievances

Once a formal or informal grievance has been raised we can put forward a Without Prejudice proposal

Reminder of a few key points

• Pick the right person to have the conversation – make sure they know what they are doing – what they should and should not say.
• Be satisfied there is a dispute. If there may not be, word the proposal gently, so, if we are not protected, we still appear in a good light
• Mark correspondence “Without Prejudice and Subject to Contract”.

“Subject to contract” avoids there being a binding contract until the Settlement Agreement is signed

Action

If you are thinking about having a Without Prejudice conversation with one of your employees, and need a bit of help with the process, give us a call or send us an email, and we can have a (free, with no obligation) chat about your situation and how we can help you sort it out – with minimum drama and legal risk.