When can an 'Off the Record' chat prejudice your position?

 Employers often want an “off the record” chat with employees to see if they can persuade an employee to leave quickly and amicably under a compromise agreement. Such chats are seen as being more friendly than going through a formal process which documents the employee’s failings – and if successful they tend to resolve matters more quickly than following a full dismissal procedure. However, where the employee does not accept the offer, the employer can often be left in a difficult position as the employee tries to rely on the discussion as part of claims of discrimination or constructive dismissal. Here are some top tips for making sure the conversation is kept out of the court room….

The ‘Without Prejudice’ rule

  • The ‘without prejudice’ rule will generally prevent anything said during a genuine attempt to settle a dispute from being put before a court or tribunal as evidence.  This is founded upon the public policy of encouraging parties to speak openly and find ways to resolve their dispute without the fear that a court or tribunal will find out what has been said and consider it an admission of guilt.
  • If there is no pre-existing dispute, but rather the discussion comes out of the blue or takes place during a disciplinary or capability procedure, the ‘without prejudice’ rule will not apply and the conversation will be disclosable in a court or tribunal. Therefore, employers should take great care about the timing of the discussion and the message that is delivered, and should not assume that simply because a discussion has been labelled ‘without prejudice’ the employee will be prevented from relying on those discussions.
  • Further, the ‘without prejudice’ rule can be displaced, for example where:

    a) something dishonest is said during the discussion which affects the court or tribunal case; or

    b) there is an element of unambiguous impropriety (a term used to describe situations where the ‘without prejudice’ rule has been used to conceal some bad action on behalf of the party seeking to rely on it).  For example, during settlement or grievance discussions the employer makes comments that could be construed as discriminatory such as “we want to dismiss you because you are black”.  In this situation, the public policy in withholding the statement is outweighed by the requirement that such a statement should be brought to light.

Managing the risk

  • Employers should try to avoid having unexpected without prejudice discussions about employees leaving the business. Such a discussion can lead to complaints of constructive unfair dismissal, or be used by the employee as evidence that the employer had decided to terminate employment before commencing a formal dismissal procedure. 
  • Ideally, without prejudice conversations should commence after a formal dismissal procedure has been started and should run in tandem with that formal process.  This way, if the conversation proves to be unfruitful, the employer will be better able to show that it followed the formal procedure and the dismissal was fair.
  • Because of the risk of the conversation being disclosable, employers should take care of the content of the discussion. For example, they should make sure they have a potentially fair reason for wanting to terminate employment and explain that the conversation is with a view to reaching an amicable agreement to avoid the unpleasantness of a formal process. This means that, even if the conversation is disclosed to the tribunal, the employer might still be able to argue it had a fair reason for dismissal even if the process was unfair (thus limiting the amount of compensation awarded).
  • Finally, once without prejudice conversations have commenced, the employer should ensure that the employee knows what this means, i.e. what is said cannot later be used as evidence before a court or tribunal, and ask the employee to confirm that he is agreeable to speaking on a without prejudice basis.

Tips for handling potential ‘without prejudice’ discussions

  • Be prepared – before going into a compromise meeting, consider carefully an initial offer that you are willing to make.
  • “Without prejudice” – make it clear that the discussion is being had on a without prejudice basis, ensure the employee knows exactly what that means and agrees to speak on that basis.
  • Key strengths – think about the key strengths of the employer’s position, but avoid going into a debate about this.
  • Listen – be in “listening mode” as far as possible.  You may be able to detect subtle undertones as to the employee’s willingness to fight or settle and/or the amount of compensation being sought.
  • Be clear – make sure that the employee knows that any financial settlement is subject to concluding a written compromise agreement in terms agreeable to the company.
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