What is the “without prejudice” rule in employment law?

The “without prejudice” rule generally prevents communication that is made in a genuine attempt to settle an existing dispute from being able to be put before the court as evidence.

How is “without prejudice” used in employment law disputes?

Its main purpose is to allow negotiations to take place freely when an employer and employee have a dispute. It works on an off the record basis with a view to trying to settle the dispute before it goes to tribunal or court. Any written communication should state clearly “without prejudice” and any verbal discussions should open with the same. 

It is important to note that the “without prejudice” rule only applies to communication made in a genuine attempt to settle an existing dispute. It does not apply to communication that does not form part of a settlement discussion.

Does there need to be a pre-existing dispute for the “without prejudice” rule to be valid?

You can only label communication “without prejudice” if you’re trying to settle an existing dispute. An exception to this, is “protected conversations”. 

“Protected conversations” often take place between an employer and an employee to discuss the employee exiting the organisation. If you abide by the rules relating to “protected conversations” then those conversations cannot be used against you, However, the protection is limited and only applies to ordinary unfair dismissal claims.

Can employers make a “without prejudice” proposal in a redundancy situation?

Yes, and this is often the case. It doesn’t necessarily mean that the employer has done anything wrong, but in most cases they may be looking to bypass parts of the lengthy redundancy process to give the employee an enhanced package instead. If the employee decides not to take the package offered, it is most likely that it is withdrawn and then both parties would need to go through the full redundancy process. This would mean that there would be no uplift in the severance package. 

With this in mind, most people accept the “without prejudice” package especially where the redundancy is genuine and not open to challenge.

What does “without prejudice and subject to contract” mean?

Communication marked “without prejudice and subject to contract” indicates that neither party wishes to be bound by the terms until all the terms have been agreed and the contract signed by both parties. Correspondence relating to a settlement agreement and drafts of the agreement itself will usually be marked “without prejudice and subject to contract”.