In workplace disputes, employers and employees often want to explore settlement without the risk that discussions will later be used against them in an Employment Tribunal. Two important legal mechanisms in England and Wales provide a degree of confidentiality in these situations: without prejudice conversations and protected conversations.
Although these terms are frequently used interchangeably, they are not the same. Understanding the distinction is essential for employers managing risk and employees protecting their rights.
What Does Without Prejudice Mean
The without prejudice rule is a long established principle of common law. It allows parties who are in a genuine dispute to communicate in an attempt to settle that dispute, without those communications being admissible in court or tribunal proceedings.
For the rule to apply, there must be an existing dispute between the parties. A conversation labelled without prejudice will not automatically be protected if there is no dispute in reality.
If the conditions are satisfied, statements made during without prejudice discussions cannot normally be relied upon in subsequent proceedings. This encourages open negotiation and frank discussion about settlement.
However, there are limits. The protection does not apply where there is evidence of fraud, misrepresentation, undue influence or other unambiguous impropriety. It also does not automatically protect conversations relating to discrimination claims if there is no pre existing dispute.
Employers should therefore be cautious about assuming that marking a letter without prejudice guarantees confidentiality.
What Is a Protected Conversation Under Section 111A
Protected conversations are a statutory concept introduced by section 111A of the Employment Rights Act 1996. They allow employers and employees to have off the record discussions about termination of employment in certain circumstances, even where there is no existing dispute.
This provision applies only to ordinary unfair dismissal claims. It does not apply to claims involving discrimination, whistleblowing, breach of contract or automatically unfair dismissal.
A protected conversation cannot generally be referred to in an Employment Tribunal claim for ordinary unfair dismissal. This allows employers to initiate exit discussions without first manufacturing a dispute.
There are important safeguards. The protection will not apply where there has been improper behaviour. ACAS guidance suggests that improper behaviour can include harassment, intimidation, victimisation, discrimination or placing undue pressure on an employee to accept an offer.
Examples of undue pressure may include giving an employee an unreasonably short deadline to consider a settlement agreement or threatening dismissal if an offer is not accepted.
If improper behaviour is found, the Tribunal may allow evidence of the protected conversation.
Key Differences and Practical Risks
The distinction between without prejudice and protected conversations is crucial for employers seeking to manage exits lawfully and strategically.
The main differences include:
• Without prejudice requires an existing dispute, whereas protected conversations do not
• Protected conversations apply only to ordinary unfair dismissal claims
• Discrimination and whistleblowing claims are not covered by section 111A
• Improper behaviour can remove statutory protection
• Labelling a conversation incorrectly does not guarantee confidentiality
Employers often rely on both mechanisms simultaneously by stating that discussions are without prejudice and subject to section 111A where applicable. However, careful legal analysis is needed to assess whether the legal tests are met.
Employees should also understand that not all settlement discussions are legally protected. If discrimination or whistleblowing issues arise, evidence of conversations may still be admissible.
Because employment disputes frequently involve multiple potential claims, including discrimination, relying solely on section 111A protection can create risk.
Best Practice for Employers and Employees
Proper handling of settlement discussions reduces the likelihood of litigation and reputational harm.
For employers, preparation is essential. Before initiating a protected conversation, consider the potential claims that could arise. If discrimination issues are present, section 111A protection will not apply. In those circumstances, establishing a genuine dispute and relying on without prejudice principles may be more appropriate.
Conversations should be conducted calmly and professionally. Employees should be given a reasonable period to consider any proposed settlement agreement. ACAS guidance suggests a minimum of ten calendar days to consider a written offer.
All settlement agreements must comply with statutory requirements to be legally binding. This includes the employee receiving independent legal advice from a qualified adviser.
For employees, it is important not to feel pressured into immediate decisions. You are entitled to take advice and to negotiate terms. Settlement discussions are often the beginning of a negotiation, not the final offer.
Both parties should seek specialist legal advice before entering into sensitive discussions. Errors in approach can undermine protection and expose parties to evidential risk.
Strategic Legal Advice Makes the Difference
Without prejudice and protected conversations are powerful tools in managing workplace disputes and negotiated exits. However, they are technical areas of employment law with significant traps for the unwary.
Misunderstanding the scope of protection can result in settlement discussions being admitted into evidence, potentially damaging your case. Whether you are an employer seeking to manage risk or an employee navigating exit negotiations, early legal advice is critical.
Penerley advises employers and employees across England and Wales on settlement strategy, protected conversations and Employment Tribunal risk. If you are considering initiating a settlement discussion or have been invited to one, contact our employment law team today for clear, confidential and strategic advice tailored to your circumstances.
