Kate Gardner’s article first appeared in CIPD’s People Management, published here on 8 January 2025. In the article, Kate explains that failing to appreciate the distinction between the two terms when exiting employees can be costly for employers.
‘Protected conversations’ (also known as pre-termination negotiations) and ‘without prejudice’ discussions between employer and employee can help facilitate an employee’s exit on agreed terms, which will often be more appealing than going through a lengthy, formal HR process.
However, businesses must be clear on the difference between a protected conversation and one that is without prejudice. There are distinct differences and, if you get it wrong, this could result in confidentiality being lost and the conversation being admissible in subsequent tribunal proceedings.
What are protected conversations and when should they be used?
Under section 111A of the Employment Rights Act 1996, any pre-termination negotiations – ie, discussions with an employee with a view to their employment terminating on agreed terms – are inadmissible in ordinary unfair dismissal proceedings, unless there has been improper behaviour by the employer.
This means that neither the fact those conversations took place, nor their content, can be referred to in later litigation by the employee concerned. Improper behaviour can include putting the employee under pressure to leave, threatening words or behaviour, or any other form of intimidation. For example, in Gallagher v McKinnon’s Auto and Tyres (2024), the EAT considered whether an employer’s behaviour during a pre-termination negotiation was “improper” under section 111A(4).
The rule is limited to ordinary unfair dismissal cases only, so does not provide protection for any automatic unfair dismissal claim (eg, whistleblowing) or for other claims such as discrimination. This means an employee could refer to the negotiations if they bring claims other than ordinary unfair dismissal. Protection for the employer is therefore more limited than under the without prejudice rule.
However, the fact that there is no need for an existing dispute between the parties (unlike without prejudice discussions) can work well to facilitate exit discussions in more straightforward cases, such as a potential redundancy situation. Where the situation between the parties is more complex – for example, where an employee has complained of discrimination or bullying, and a dispute already exists – it is usually more appropriate for without prejudice discussions to take place.
To reduce the risk of the conversation being admissible, in verbal conversations employers should explicitly refer to the meeting being held ‘in accordance with section 111A’, and label any follow-up written communications in the same way.
What are without prejudice discussions and when should they be used?
The without prejudice rule prevents statements made in a genuine attempt to settle a dispute from being put before the tribunal as evidence. Unlike protected conversations, the without prejudice rule is not limited to certain claims and can be used in any circumstances where there is an existing dispute, and the parties are genuinely attempting to settle it.
An ‘existing dispute’ is not defined; however, if an employee has initiated tribunal proceedings there will clearly be an existing dispute. In some circumstances, raising a grievance may count as an existing dispute, but it is not clear cut. Where an employee has raised a serious grievance and has brought a claim or might reasonably contemplate bringing a claim (eg, when an employee will lodge a discrimination claim if their grievance alleging race discrimination is not upheld), this may fall within the existing dispute rules. Further, the negotiations must genuinely be aimed at settlement – it cannot simply be one party asserting their case or criticising the other.
Where discussions are intended to be covered by the without prejudice rule, at the start of any verbal conversation the parties should expressly agree that the conversation is carried out on a without prejudice basis, and any written communication should clearly be labelled as such.
Tread carefully
Protected conversations and without prejudice discussions are a useful tool to help parties engage in constructive dialogue without fear of it being used against them at a later stage. However, getting those conversations wrong can be costly, so employers must be confident they are complying with the applicable legal tests to attract the relevant protection.
Where an exit and settlement have been agreed, terms should be recorded in a legally binding settlement agreement to ensure the employee waives their right to bring future employment-related claims.