Without Prejudice Rule and Pre-Termination Negotiations Explained
03 November 2016
At times an employer may need to start negotiations with an employee to settle a dispute or agree terms for the departure of the employee from their employment. There are two ways in which to protect the confidentiality of those negotiations in English law:
Without Prejudice Rule & Pre-Termination Negotiations
Without Prejudice Rule
The Without Prejudice Rule only applies where the employer and employee are already in a dispute and potentially applies in all types of litigation. It will generally prevent statements made between the employer and employee during settlement negotiations from being disclosed to the Court or Employment Tribunal as evidence.
In 2013 a newly inserted section 111A of the Employment Rights Act 1996 was introduced. The protection under S11A allows the employer and employee to have confidential and risk free “off the record” discussions about the termination of the employee’s employment where no dispute exists. Neither the employer nor employee is permitted to disclose and rely on such protected Pre-termination Negotiations in a Court or Employment Tribunal.
The key differences between Without Prejudice Rule and Pre-Termination Negotiations are that unlike under the Without Prejudice Rule, there is no need for a dispute to have arisen for the protection under S11A to apply. Nor does the protection of Pre-termination Negotiations apply to all litigation. It only applies to “ordinary” unfair dismissal from work proceedings.
For pre-termination negotiations to be excluded from legal proceedings (for the confidentiality under S111A to apply), there should have been no “improper behaviour” by the employer or employee. Improper behaviour includes discrimination, threats of physical assault, undue pressure and harassment, bullying or intimidation.
The ACAS code of Practice on Settlement Agreements sets out guidance to be followed when conducting Pre-termination Negotiations. ACAS advises that the employee should be given at least 10 days to consider the written terms of the offer, the employee should be invited to a meeting and given the right to bring a work colleague or union representative, and undue pressure on the employee is to be avoided.
It is generally advised that the most suitable time to start Pre-termination Negotiations is once the employee has indicated that he is interested in pursuing settlement. Where the protection for Pre-termination Negotiations is not suitable, the employer and employee should follow the Without Prejudice Rule.
If after settlement negotiations, either under the Without Prejudice Rule or S111A Pre-termination Negotiations, a settlement is reached, terms of the settlement should form part of a Settlement Agreement (formerly known as Compromise Agreement).
The ability to hold a confidential conversation that could not be referred to in legal proceedings where a dispute existed was already an invite for an employer and employee to amicably end the employment relationship without the need for costly and timely legal proceedings.
With the introduction of Pre-termination Negotiations and the extension to those settlement discussions being protected, this will hopefully encourage further amicable conclusions between an employer and employee.