Sometimes employers realise that offering an employee a quick settlement to terminate their employment can be a better way of managing a situation. Usually the end result is that the employee signs a Compromise Agreement. But how do you broach the subject and start settlement discussions?
The law recognises that it is necessary for negotiations to take place without fear of them being referred to later if settlement isn’t reached. The without prejudice rule prohibits ‘without prejudice’ communications from being admitted in subsequent litigation, provided that they are discussions genuinely aimed at settling an existing dispute.
It is well-established that communications will not be covered by the rule where a party is abusing the principle and that the without prejudice rule should not be used “as a cloak for perjury, blackmail or other “unambiguous impropriety”. Exceptions to the rule appear to have been growing and some uncertainty has been cast as to how wide this exception will be. Specifically, it had been thought by some that there may be an exception to the rule where a party relied on without prejudice evidence to prove a discrimination claim. If the exceptions to the rule are apparently growing wider, should employers be more inhibited when entering into negotiations with employees?
Well, breathe a sigh of relief. The recent decision in Woodward v Santander limits the exceptions to the rule and goes some way to opening up settlement discussions once more. Only where there is a clear and obvious case of abuse will they be willing to allow such evidence to be admitted.
Dealing with problem employees is often difficult, but at least this recent decision goes some way in swinging the pendulum back in favour of the employer. However, we suggest that you always take specific advice before entering into without prejudice negotiations. We can help with advice on how to handle the process, the package to offer, and of course we can draft a Compromise Agreement to reflect the terms of the deal. Please contact us if you have any queries about this.
If you would like to talk through a situation you are dealing with, or if you need advice on any aspect of employment law, please contact any member of the Pure Employment Law team (01243 836840 or [email protected])