Settlement agreements can be a very effective, amicable way of bringing a problematic employee’s employment to an end. There are generally 2 ways to initiate these discussions. One is through a “without prejudice” conversation. The other is through a “pre-termination negotiation”. Whichever road the employer chooses can have consequences that are worth considering.
Without prejudice conversation
A without prejudice conversation can only arise when there is a dispute between the employer and the employee. This may be in the form a grievance or some other kind of dispute. If there is no dispute, any such conversation will be admissible in the courts. The key facts to remember are as follows:
- There needs to be a dispute
- The fact that negotiations have taken place can be used in the future as evidence, but not the content of those negotiations
- The inadmissibility of these conversations can be waived if both parties agree
- It is difficult to remove privilege on the basis of the conduct of parties – a party must act with “unambiguous impropriety” before the privilege is removed.
Note too that the content must be a genuine attempt to settle a dispute. If a communication merely sets out a party’s right and does not make an offer to negotiate, despite the fact it is marked “without prejudice” this information may well be admissible in the courts.
A pre-termination negotiation does not require a previous dispute between the employer and the employee, but the privilege only arises in cases of unfair dismissal. It is a discussion between employer and employee, designed to bring the employee’s employment to an end amicably. If the matter gives rise to discrimination, whistleblowing or any other automatic unfair dismissal claim, the privilege will not stand. The key facts to remember are as follows:
- This only applies in respect of unfair dismissal claims
- The fact the discussions themselves have taken place is inadmissible
- The inadmissibility cannot be waived by both parties
- It is easier to remove privilege than a “without prejudice” conversation– it only requires “improper behaviour” by either party
Note too that both types of conversations can be waived if there is to be an application for costs going forward.
Pros and Cons
There are pros and cons to the privilege arising for both of these types of discussion, the particulars of which are complicated. Employers have been undone by not being aware of the differences in the past. Remember to look before you leap and think before you speak. Don’t prejudice yourself by using “without prejudice” incorrectly.
If you require any assistance on which type of procedure to use, please get in touch with us at Blackadders and keep your eyes peeled for our free seminar in October.