Without Prejudice Settlement Agreements & Letters | Monaco Solicitors

Without Prejudice

What does ‘without prejudice’ mean?

Without prejudice is a legal term which means ‘without detriment to any right or claim’.  In non-legal speak, this means that whatever is said or done on a without prejudice basis cannot later be used to your disadvantage should you decide to make a claim in an employment tribunal against your employer. So, generally speaking (and there are some exceptions), if without prejudice protection applies to a situation, whatever is said and done in that situation (whether it’s in a meeting, a letter, an email etc), cannot later be used in evidence or relied upon by any party.

This means that there is an element of protection for the parties in a dispute if they open discussions on a without prejudice basis. (It is also known as ‘without prejudice protection’, or ‘without prejudice privilege’.)  Any discussions undertaken under the cloak of this protection or privilege are confidential between the parties. For example, if your unfair dismissal claim is for £10,000, you could make a without prejudice offer to accept £7,500. 

Writing a letter or document

When writing a without prejudice letter it is often helpful to set out the strongest points of the case. Then you should give an estimate of the legal fees which the other side would spend fighting it, and an estimate of the amount of compensation which they would have to pay you if they lose (and a realistic breakdown of that estimate). Then you can set out your discounted amount which you would accept to settle the case by way of a settlement agreement, and put a deadline for acceptance of, say, 7 days.

Top 3 Tips

  1. Without prejudice is a legal term meaning ‘this can’t be shown to a judge’
  2. Without prejudice negotiations should be conducted in parallel to your ‘open’ correspondence
  3. Without prejudice letters can be found in our Documents section

Why does the doctrine of without prejudice exist?

Without prejudice was introduced into English law to facilitate out of court settlement agreements, and therefore save tax payers’ money by cutting down on the amount of cases which end up in court. Because everyone knows that you can’t use without prejudice offers as evidence of guilt in court, people feel safe in making such offers. If the without prejudice protection was removed, then no one would make any offers.

So in the example above, you wouldn’t offer to accept £7,500 if you thought that the judge would find out about it, because you’ll be telling the judge that your claim is worth £10,000.

How is without prejudice implemented in practice?

Firstly, there has to be a dispute between the parties in order to qualify for without prejudice protection. So,  if you have a grievance against your employer (no matter what it may be about), or if your employer has what it thinks is a genuine issue with, say, your performance, then you can usually assume that if one of the parties wants to start negotiations on a without prejudice basis then it will qualify as being a dispute between the parties.

For your purposes in negotiating a settlement agreement, it is highly likely that there already is a dispute and therefore it’s safe to assume that you or your employer can commence without prejudice communications.

A without prejudice communication has two elements

There are two elements to making a communication or settlement agreement document ‘without prejudice’:

1. It needs to be clearly marked with the words ‘without prejudice’, or ‘without prejudice and subject to contract’, or if it is a verbal conversation then you or your employer need clearly to say ‘do you mind if we speak without prejudice’.

2. There needs to be a genuine attempt to settle the case out of court, for example an offer of an amount of money to settle.  It is not enough to just talk about the merits of the case and just say the words ‘without prejudice’ as it is likely in that scenario that the protection would not apply.

The difference between ‘without prejudice’ and ‘open’

Open correspondence is any email, letter, phone call or meeting which is not without prejudice. So you might write a letter to your employer resigning from your job, or raising a grievance, or during a tribunal case you might request disclosure of vital evidence or contact details for a witness.

All open correspondence can be referred to in tribunal in front of a judge. For example, you can point out to the judge that you wrote an open letter to your ex employer requesting copies of your HR file, but no response was ever forthcoming, therefore they must be hiding something. Judges don’t want to see draft settlement agreements marked ‘without prejudice’.

You can’t generally use without prejudice communications in legal proceedings

You can’t use anything which is discussed in without prejudice discussions, to build your case or as a reason for your resignation, except in specific circumstances (see below). So, if your employer raises an issue with you in a without prejudice discussion which could breach trust and confidence, you cannot use this against them.  

However, in exceptional circumstances, without prejudice exchanges can be used in legal proceedings.  These circumstances are:

[1] If without prejudice exchanges uncover evidence that may allow a settlement agreement to be rejected on the grounds that it’s based on misrepresentation, fraud or undue influence

[2] If without prejudice exchanges unearth clear evidence of perjury, blackmail or other unambiguous wrongdoing or criminal behaviour

[3] As evidence that a claimant has acted reasonably in mitigating their losses by settlement

[4] As evidence when both parties to the without prejudice material agree that it should be admitted in court.  For example, a letter marked “without prejudice save as to costs” could be shown to a judge after the conclusion of a case to make a ruling on any outstanding costs issues.

Generally in employment proceedings it is very rare for without prejudice conversations or correspondence to be shown to a judge, and usually it is only in discrimination or whistleblowing cases when evidence of wrongdoing has arisen in correspondence.

Without prejudice meetings and phone calls

It is very common to pick up the phone to the other side during a case, or even before a claim is issued, and ask to speak without prejudice. If they say yes, this would become a without prejudice phone call. Then tell them that you think that you would accept £X amount to settle out of court, and perhaps give your reasons.

Without prejudice meetings are less common after tribunal proceedings are issued, simply due to the cost and effort of physically getting people together, but in the more high value cases it can be beneficial to have a without prejudice meeting. It is much more common for your employer to invite you to a without prejudice meeting whilst you are still employed, for example after you have submitted a written grievance but before the grievance is investigated. Your employer would then ask to speak without prejudice, and suggest an exit package for you. Either way, you can check out our dedicated article on without prejudice meetings.

Where it is a verbal agreement to speak without prejudice obviously there is an element of trust and you need to be careful what you say and who you say it to. Instructing us to represent you is a safe bet in this regard.

Without prejudice negotiation tactics

Normally the ‘open’ letters (those not marked ‘without prejudice’) between the two parties will be outright denials of liability, and at the same time ‘without prejudice’ letters are sent saying “just in case we are wrong about the case, then we offer you £X amount in full and final settlement.”

There are some very useful pages on this site dealing with negotiating tactics, but essentially it’s important to remember that your employer is not going to give large sums of settlement money to disgruntled employees just because they ask nicely. In fact, you’re probably disgruntled in the first place because your employers are not particularly nice people. So you need to display a tough negotiating stance.

That is not to say you should be rude. Always be polite and reasonable, but still tough. So precis your offer with some salient facts regarding your case. It helps if you can very concisely identify the three legally strongest points and set them out as briefly as possible. Then offer the olive branch of your settlement agreement amount.

It is often advisable to aim high rather than low, but not so high that you look unrealistic. To get an idea of how much your case could be worth, try our settlement agreement calculator.

Legal fees paid for by the employer

The legal fee paid for by the employer for legal advice on settlement agreements (normally around £250-£500+VAT) is meant to be the lawyer’s fee for simply reviewing the settlement agreement document with you and then proceeding to sign it off.

This fee would not normally cover an in-depth negotiation of an increased amount, and therefore if you are offered such a service by lawyers within the small fee payable by the employer, then it is unlikely to be a proper negotiation service aimed at getting you the best deal. Of course, your employer is not going to fund a proper negotiation against themselves; instead they will just fund an independent lawyer signing off the deal.

Without prejudice letters and emails

If you want to see more examples of without prejudice letters and emails, you can just copy our free templates in the Documents section of this site. Here is one we made earlier, which is a very basic one just to give you an idea. The templates in our documents section are much more detailed:

[date]

WITHOUT PREJUDICE

Dear Sirs

I write further to my open letter of x date. In that letter I set out my grievances and you should be aware that I am more than willing to pursue this matter to tribunal in the absence of a swift resolution. My health has been badly affected and I attach no price to my health. On a purely commercial basis however, and for a swift resolution, I would be prepared to sign a compromise agreement giving me 3 months’ wages tax free plus my full notice pay. This offer remains open for 7 days from the date of this letter.

Yours faithfully

[your name]