There are moments when an employment relationship reaches a point where a managed exit may be the most reasonable route forward. It might follow performance or behavioural concerns, restructuring, a breakdown in trust, or simply a situation where continuing the relationship no longer feels commercially or culturally right.
That is where a without prejudice conversation, or a protected conversation, can be useful. But these discussions are often misunderstood.
For employers, the key point is this:
“Off the record” does not mean risk-free. A settlement conversation is not a shortcut around good process. It is a legal and commercial tool that needs to be handled carefully.
Employment Tribunal pressure makes this even more important. In Q3 2025/26, Employment Tribunals received 13,000 single claim receipts, with 58,000 single claims in the open caseload at the end of December. Across single and multiple claims, there were 523,000 open Employment Tribunal claims at the end of the quarter.
In that context, employers need to think strategically about how they resolve workplace disputes before they escalate.
What is a without prejudice conversation?
A without prejudice conversation is a discussion aimed at settling an existing dispute. The purpose is to allow both sides to speak openly about settlement without those discussions being used as evidence later (subject to any costs application).
However, the protection does not apply just because an email or meeting is labelled “without prejudice”. There needs to be an existing dispute and a genuine attempt to settle it. ACAS guidance explains that without prejudice usually requires an existing employment dispute, whereas section 111A protected conversations can apply even where no dispute has yet arisen.
That distinction matters. If there is no existing dispute, the employer may need to rely instead on the statutory protection for pre-termination negotiations under section 111A of the Employment Rights Act 1996.
Without prejudice vs. protected conversations
Employers often use these terms as if they mean the same thing. They do not.
A without prejudice conversation is linked to an existing dispute.
A protected conversation usually refers to pre-termination negotiations under section 111A of the Employment Rights Act 1996. Section 111A covers offers or discussions held before termination, with a view to employment ending on agreed terms.
The advantage of section 111A is that it can apply even where there is no current dispute. The limitation is that it is narrow. It mainly protects discussions from being used in ordinary unfair dismissal claims. It does not give employers blanket confidentiality across every type of claim.
That is where employers need to be careful. If the background includes discrimination, whistleblowing, breach of contract, harassment, victimisation, pregnancy or maternity issues, or other automatic unfair dismissal risks, a protected conversation may not protect the business in the way the employer expects.
Why this matters now
Settlement conversations are becoming more strategically important for employers. The Government has confirmed that the Employment Rights Bill is expected to reduce the qualifying period for unfair dismissal from 24 months to 6 months, while maintaining existing day-one protection for discrimination and automatically unfair dismissal grounds.
This does not mean employers should rush into settlement discussions. It means they need stronger decision-making, better documentation, and earlier advice when workplace issues start to become difficult.
A well-handled conversation can reduce disruption, avoid a lengthy formal process, preserve dignity, and give both sides certainty. A poorly handled one can do the opposite: inflame the situation, trigger a grievance, or create evidence that damages the employer’s position.
The biggest risk is pressure
The most common mistake is making the employee feel concerned.
A protected conversation should not be a threat dressed up as a settlement offer. Employers should avoid saying or implying that dismissal is inevitable if the employee does not accept the proposal. ACAS guidance warns against improper behaviour such as:
- Harassment
- Bullying
- Intimidation
- Victimisation
- Physical threats
- Undue pressure during settlement negotiations
The better approach is measured and factual. Explain the context. Set out the proposed terms. Give the employee time to consider them. Make clear that the discussion is voluntary. Be ready to follow a fair internal process if a settlement is not agreed.
That is not just a legal point; it’s a leadership point.
Confidentiality is not absolute
Many settlement discussions include confidentiality clauses. These can have a legitimate purpose, particularly where the parties want a clean break or the employer needs to protect commercially sensitive information.
But confidentiality clauses must not be used to silence people about unlawful conduct. The Equality and Human Rights Commission has issued guidance on confidentiality agreements in discrimination cases, focusing on their use in relation to discrimination, harassment and victimisation claims.
The Government has also recognised that confidentiality clauses can be legitimate in employment contracts and settlement agreements, but that misuse to silence or intimidate victims of harassment or discrimination is unacceptable.
For employers, the practical message is simple: confidentiality should protect legitimate business interests, not conceal poor behaviour.
A settlement agreement must be valid
If a settlement is reached, it would usually be documented in a settlement agreement. This is a legally binding document under which the employee agrees not to bring specific claims, usually in exchange for compensation or other agreed-upon terms.
The Law Society explains that a settlement agreement records what has been agreed, usually involves the employee giving up legal claims, and requires independent legal advice before it is valid.
Employers should also think beyond the headline payment. Notice, holiday pay, bonuses, benefits, tax treatment, references, announcements, company property, restrictive covenants, confidentiality, and agreed wording all need to be addressed.
A vague or rushed agreement may not provide the certainty the business needs.
Practical steps before opening the conversation
Before starting a without prejudice or protected conversation, employers should be clear on:
- Whether there is already a dispute
- Whether section 111A protection is likely to apply
- Whether there are discrimination, whistleblowing, or automatic unfair dismissal risks
- The commercial reason for proposing settlement
- The financial package being offered
- What process will follow if the employee says no
- Who is best placed to lead the conversation
- Whether legal advice should be taken before the meeting
This preparation does not make the conversation more aggressive; it makes it safer, clearer, and more professional.
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Without prejudice, conversations can be highly effective, but only when used properly. They should not be used to force an exit, avoid a fair process, or paper over deeper workplace issues.
Handled well, they can help employers resolve difficult situations with clarity, control, and dignity. Handled poorly, they can create new risks and weaken the business’s position.
At Rinew Legal, we help employers approach sensitive conversations with confidence – from assessing risk and planning the conversation, to drafting settlement agreements and managing the steps if an agreement is not reached.
Are you thinking about having a without prejudice or protected conversation with an employee? Speak to our team before the conversation takes place. Early advice can help you avoid unnecessary risk and reach a cleaner, more commercially sensible resolution.