Without prejudice letters & settlement agreements – 10 Tips

In this 10 point 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 their meaning and history and when to write them, scroll down to the second half of this article.

Writing without prejudice letters

1. Making allegations or accusations

In your first without prejudice letter,  be selective and keep some issues in reserve for the final negotiating stages.  Try not to over-emphasize 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 it 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:

  1. Proposed Termination Date.
  2. That you want payment in lieu of notice.
  3. That you want your outstanding holiday pay paid.
  4. That you want an agreed reference.
  5. Any other non-financial terms.
  6. 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 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.


Next steps

If you want to talk to us about your work situation, including your next steps and whether you deserve a better deal, just get in touch on 020 7717 5259 or request a free consultation, no obligation.

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]


Next steps

If you want to talk to us about your work situation, including your next steps and whether you deserve a better deal, just get in touch on 020 7717 5259 or request a free consultation, no obligation.