Without Prejudice Negotiations Can Be High Risk for Employers if Not Handled Correctly


“Without prejudice” negotiations in an employment dispute can be an incredibly useful tool.

For many employers, they represent the best route to an acceptable outcome to an employment dispute.

Because, quite frankly, the employer often “hasn’t a leg to stand on”. You wouldn’t believe what some of them get up to!

However, if they are not handled correctly they can backfire badly on the employer.

Well Drafted Settlement Agreement

And without a well drafted agreement, the employer does run the risk of an employee collecting on foot of a settlement and bringing legal proceedings afterwards.

Without prejudice discussions or negotiations are generally, but not always, excluded from being introduced into evidence in subsequent legal proceedings.

The purpose of such discussions are to resolve the dispute to the satisfaction of both parties without the costs associated with going to Court or some other dispute resolution body.

“Without prejudice” negotiations should be carried on between lawyers for both sides, not the parties themselves. In the employment context it is a mistake for the employer to carry on “off the record” or “without prejudice” discussions with an employee.

The reason for this is simple: the employee may claim not to have fully understood the implications of such discussions.

And if this is the case the employee may well claim that even though she gave her consent for such discussions to be private, “off the record”, and “without prejudice” that her consent was not informed consent.

Independent Legal Advice

The employer should ensure that the employee has obtained independent legal advice and confirms this in writing.

Any decision maker, be it a Court or tribunal, is likely to find for the employee on this point given the perceived and/or real imbalance of power between employer and employee.

There is another reason why without prejudice negotiations or discussions can backfire on the employer.

For discussions to be truly without prejudice there must be a dispute between the parties; and the discussions must be an attempt to settle that dispute. Not a dispute in the normal sense of the word but a dispute in which legal proceedings have commenced or are being contemplated.

It’s not always certain whether a “dispute” would therefore exist to allow “without prejudice” discussions.

As state above “without prejudice” discussions can sometimes be admitted in evidence in subsequent legal proceedings. The High Court has held that without prejudice discussions can be admitted in evidence where the interests of justice require it.

For employers therefore it is prudent not to make a without prejudice offer directly to the employee to agree their exit from the employment.  Such an offer could be put forward by the employee in an unfair dismissal claim as evidence of dismissal.

The better course of action is for the employer to instruct a solicitor to negotiate with the employee’s solicitor.

It is better again if the employee or his/her solicitor initiates the discussions.

Negotiations between solicitors will be more structured and reduce the chance of the employee claiming that she did not know what without prejudice discussions meant. And the written settlement agreement should be water tight.

So if you are an employer and are thinking about getting rid of a troublesome employee, you should give some serious consideration to a “negotiated exit” through without prejudice negotiations.

It will probably be cheaper in the long run.