Without prejudice letters & settlement agreements – Ten Tips
‘Without prejudice’ communications are a key element to negotiating a settlement agreement. They can take written or verbal form.
In this guide, we’d like to share with you some of the tips we’ve built up over the years when writing ‘without prejudice’ letters. So when you’re drafting your own letter, you can ensure you get what you want: a settlement agreement with a good sum of money, and not what you don’t want: two years of expensive litigation in the employment tribunal.
If you’d like to understand more about the context of ‘without prejudice’ letters, including when to write them, read our article here.
1. Be subtle with your allegations
In your first without prejudice letter, be selective and keep some issues in reserve for the final negotiating stages. Try not to over emphasise all the ways you think they’ve mistreated you. Instead stop and think if there is a way in which you can more subtly mention their behaviour.
That’s not to say you shouldn’t set out the facts that you are relying upon to negotiate. You should, but you can do this whilst still not making damaging allegations against named individuals, especially individuals who have the power to offer you a settlement agreement.
The more you make allegations and accusations in a without prejudice letter, the more your employer will defend those allegations: it’s a natural thing to defend yourself when you’re accused. They are likely to investigate further and this will generate still more letters.
The parties may become entrenched, with the likelihood of an agreement disappearing over the horizon. All this, when what you really need is a quick, painless deal which leaves you financially better off, and able to look for another job free from immediate financial pressures.
2. Simply set out the facts
It is best to set out the facts in a neutral way. Those facts, if they could form the basis of a claim, will speak for themselves. Remember, you are dealing with an employer, not another employee, and your employer will have an HR department and lawyers or advisers who specialise in employment law.
Therefore, once your letter gets passed to these individuals for their views, they will understand that you may have a claim against the company or that you present a risk to the business. They will know what claims you may have and what they are worth. There is usually no need to say that Mr X has it in for you and that’s why he failed to score your performance procedure correctly, or that Mrs Y has breached your contract and that you have an unfair dismissal claim.
This is, in our view, the way to set out most without prejudice letters which would fall under the head of ordinary unfair dismissal (eg redundancy, performance, conduct etc), breaches of contract, other contractual claims such as bonuses, holiday pay etc. By setting the facts out in a neutral way, you will appear professional and easy to deal with. The company will appreciate this and is much more likely to want to deal with you.
3. ‘Without prejudice’ letters in serious cases like discrimination or whistleblowing
In such instances as these, and contrary to the general advice given above, it’s usually best to set out the allegations themselves. You can, however, do this in such a manner that does not antagonise your employer too much. Set out the allegations, the dates on which they occurred, the witnesses to them, reference any evidence that you may have to support your case (see website section on Evidence) and then explain in a neutral manner why you consider the allegations to be – for example – discrimination.
4. Make your letter look professional
It may sound obvious, but if you’re not used to writing legal letters, then it’s important to make sure that your letter is typed on a computer and in the correct letter format. If you are unsure of the correct format for a formal letter, use one of the examples from our website
If you intend to send the letter electronically, print off a copy, sign it, scan it and then send it to your employer. Alternatively, use an electronic signature and convert the document to a PDF file if you can. Avoid sending your letter in an editable Word format.
5. Use professional language
The readers of your letter will be professional people, so if you want to be taken seriously, use the correct terms, write in complete sentences, use paragraphs, bullet-points and headings, and above all make sure your use of language is correct in terms of grammar and meaning. Use a spell-checker and don’t ignore those red and blue lines under words on your screen, they usually mean that something is wrong.
6. Use a three step formula
When drafting a letter there are three steps: the introduction, the facts of the dispute, and the resolution, as set out below. This is the anatomy of any good without prejudice letter which has a chance of leading to a successful negotiation.
7. Step One: the introduction
This should be the opening of the letter in which you introduce yourself, your role, what you do for the company, how hard you have worked and how long for. You should mention any commendations or accolades you are received from the company and any successes you have personally had or contributed to in the last year or two.
Say how much you have enjoyed working for the company and that you value its work. Every company wants to know how much you enjoyed working for it and it is much more likely to deal with you if you are respectful and come to negotiations out of a sense of genuine regret as opposed to showing malicious intent.
This sets the scene for you to tell the company what it has done wrong. It is the classic contrast between the good and the bad and shows the company how much this means to you and how hard it has been for you to approach it. This creates an element of guilt for the company, and of shock that one of its employees can be so unhappy.
8. Step Two: the facts of the dispute
Now is the time to tell your employer why you are unhappy. Set out the key facts that you think could lead to a claim, but don’t ever mention a claim, merely that these things have happened to you and that you feel very unhappy and hurt by them. Don’t exaggerate: stick to the most important facts and leave out the trivial matters. Concentrate on recent events and ignore events from years ago unless they are connected to recent events and could lead to a discrimination claim.
Set out the events in date order and make references to evidence that you have collected. If you feel it appropriate at this stage, you can send a copy of the key items of evidence with your without prejudice letter. If you are going to do this, then you should use the format discussed in the website section on Evidence and reference the evidence by the tabs in the evidence file.
Don’t make this section too long: remember, you are trying to capture and hold your employer’s attention and you are unlikely to do this by writing a twenty-page letter making dozens of allegations. Ideally, your entire letter should fit on no more than three sides of A4, and that includes the headings and your signature.
It’s a real art, as well as a science, to write a concise without prejudice letter while still maintaining the full impact of all the contents. If your employer receives this kind of masterpiece, they will probably think you’ve been helped by a good lawyer and so will be more inclined to offer you a deal.
9. Step Three: the resolution
This is the key part of your letter. You have presented your employer with a problem (the facts of the dispute), now you need to present it with a solution: a settlement agreement, termination and a payment. In this section, if you want to leave your job then you need to say so and when you want to leave. Be humble about it, say you regret this decision very much, but you see no other option. Don’t mention an employment tribunal as this can often kill goodwill stone dead and prevent an agreement.
The best way to set out your offer is as follows:
- Proposed Termination Date.
- That you want payment in lieu of notice.
- That you want your outstanding holiday pay paid.
- That you want an agreed reference.
- Any other non-financial terms.
- Your proposal for an ex gratia payment (set out in gross months’ salary), the first £30,000 of which will be tax free (see separate guide on ex gratia payments).
Points 1-5 above are easily negotiable and most employers will agree to this if the first parts of your letter are well-drafted. Therefore, for the purposes of presentation, you should set out the easy points first. This gets your employer, or the reader of the letter, used to saying “yes” in their head, so by the time they get to point 5 they are more receptive to your proposals.The last line of your letter before the signature should always be ‘I look forward to hearing from you’
10. How much to ask for in a settlement agreement
In terms of how much to ask for, that depends on the case you have, but remember, you are asking for a quick deal, so you should accept less than you could hope to achieve at an employment tribunal. This way, you won’t have to pay for legal representation, incur the very real risk of losing your case, and you’ll get the tax advantages of settling under a settlement agreement: ‘A bird in the hand is worth two in the bush’ as the saying goes.
In general terms, most negotiations settle for between notice pay plus one month’s gross salary and notice pay plus four months’ gross salary. If you have an excellent case, or represent a risk to the business in terms of clients, then you should be aiming higher, maybe notice pay plus six months. So, if you have an idea of the amount you can realistically settle for, you need to pitch a little higher when making an opening offer: a little higher, but not ridiculously so.
If you can realistically aim for three months’ salary plus notice, and you offer twelve months’ salary, then your employer is not going to take you seriously. Ironically, if you plan to use a lawyer, it can be a good tactic to offer a ridiculous amount straight away, then to instruct a lawyer to negotiate on a sensible basis. Normally though, you should really be asking for up to double what you can realistically achieve, depending on the strength of your case. So, if you can expect three months’ gross salary plus notice, then you could try pitching for six months’ gross salary plus notice in your initial offer.
Examples of without prejudice letters and emails
If you want to see some examples of without prejudice letters and emails, have a look in the in the Documents section of this site, where you can copy and use our free without prejudice templates if you wish.
A note on verbal without prejudice communications
We’ve focused above on written communications, but if you’re thinking about having, or are asked to have a without prejudice telephone conversation or face -to-face mee,ting, take care, unless you have an experience lawyer/negotiator to advise you beforehand. If you are not experienced in negotiating in such circumstances, or not adequately prepared, you could find yourself in a tricky situation, and end up agreeing to things that you later find are not in your best interests. For further information and guidance on this topic, have a look at our article on without prejudice meetings and conversations .