What does Without Prejudice mean really?

In most disputes, anything one side admits can be used against them later. Without prejudice is an important exception. Statements made in a genuine attempt to settle a dispute cannot normally be put before a court or employment tribunal as evidence against the person who made them.

This matters a great deal in employment disputes, where many cases are settled through negotiation rather than at a hearing. This guide explains what without prejudice means, when it applies, when it does not, and how it fits with protected conversations at work.

What does without prejudice mean?

The without prejudice rule allows both sides to speak openly when trying to settle a dispute, without worrying that an offer or concession will be used against them if the negotiations fail. The idea is to encourage people to resolve disputes without going to a hearing.

The rule only applies where:

• there is an existing dispute between the parties, and
• the communication is a genuine attempt to settle that dispute.

In an employment context, an employee might have raised a grievance, threatened a claim or already started tribunal proceedings. If there is no dispute at that point, the rule does not apply, however the communication is labelled.

In BNP Paribas v Mezzotero, for example, the Employment Appeal Tribunal allowed an employee to rely on a meeting at which her employer proposed ending her employment shortly after she had raised a grievance, partly because raising a grievance did not mean the parties were already in dispute about ending her employment.

Without prejudice communications can be in a letter, an email or a conversation. They do not have to come from a solicitor.

Does it need to be labelled without prejudice?

The label is helpful but not decisive. A document marked without prejudice will not be protected if it is not part of a genuine attempt to settle a dispute. Equally, an unmarked communication can be protected if it is clearly part of settlement negotiations.

Even so, it is sensible to mark settlement correspondence clearly as without prejudice. If a chain of emails begins on a without prejudice basis, later messages that continue the same negotiations are usually protected too. If the negotiations break off and new correspondence starts, it may be treated as open unless it is marked.

Exceptions to the without prejudice rule

Without prejudice communications can be put before a court or tribunal in some limited situations, including:

• To decide whether a settlement was reached: if one side says an agreement was concluded and the other disagrees, the correspondence can be looked at to decide the point.
• Misrepresentation, fraud or undue influence: if a settlement is said to have been obtained by one of these, the communications can be used as evidence.
• Estoppel: where one side made a clear statement during negotiations that the other relied on, it may be admissible.
• Unambiguous impropriety: the rule cannot be used to hide blackmail, threats, discrimination or other clearly improper behaviour. The Court of Appeal in Unilever plc v Procter and Gamble Co (2000) stressed that this exception only applies in clear cases.

Protected conversations in employment

Employment law has a separate, statutory form of protection. Under section 111A of the Employment Rights Act 1996, offers and discussions about ending employment on agreed terms, often called protected conversations, cannot be used as evidence in an ordinary unfair dismissal claim. Unlike the without prejudice rule, this protection applies even if there is no existing dispute.

There are important limits:

• It only covers ordinary unfair dismissal claims. It does not protect against claims for discrimination, whistleblowing or automatically unfair dismissal.
• It is lost if there is improper behaviour, such as harassment, bullying, putting undue pressure on the employee or threatening dismissal if they do not accept an offer.

The Acas Code of Practice on settlement agreements suggests that an employee should normally be given at least 10 calendar days to consider a proposed settlement.

Without prejudice save as to costs

A without prejudice save as to costs letter is protected in the same way as an ordinary without prejudice letter, except that it can be shown to the court or tribunal when it decides who should pay legal costs.

In employment tribunals, costs are only awarded in limited circumstances, such as where a party has behaved unreasonably, but a tribunal may take account of a rejected offer when deciding whether to make a costs order.

How this affects settlement agreements

Most employment disputes that settle do so through a settlement agreement. Negotiations usually take place on a without prejudice or protected conversation basis, and the employee must receive independent legal advice before the agreement is binding. Our guide to settlement agreements explains how they work, our article on negotiating a severance package offers practical tips, and you can read about who pays the legal costs of a settlement agreement.

If you have received a without prejudice letter or have been invited to a protected conversation, book a free 30-minute consultation with our employment solicitors or call 0141 471 9166.