Settlement agreements are not exclusively offered by employers. Employees can — and sometimes should — initiate settlement negotiations. Understanding the legal framework for protected conversations and without prejudice discussions gives you more control over your situation than many employees realise.
The Two Routes to Protected Negotiations
There are two main legal frameworks that protect settlement discussions from being used as evidence in employment tribunal proceedings. The first is the 'without prejudice' rule, which applies where there is an existing dispute between employer and employee. The second is the statutory 'protected conversation' procedure under section 111A of the Employment Rights Act 1996, which can apply even before a formal dispute has arisen.
Without Prejudice Discussions
If there is already a dispute between you and your employer — for example, a grievance, a disciplinary process, or a redundancy consultation — any discussions about settling that dispute on agreed terms can be conducted on a 'without prejudice' basis. This means that what is said in those discussions cannot generally be used as evidence in tribunal proceedings. Either party can initiate a without prejudice conversation.
Protected Conversations Under Section 111A
The protected conversation procedure was introduced in 2013 to allow employers to have pre-termination negotiations with employees even where no dispute exists. However, the protection is not absolute — it does not apply if the employer behaves improperly, for example by applying undue pressure or making threats. Employees can also use this procedure to initiate discussions about leaving on agreed terms.
Why an Employee Might Initiate Negotiations
There are several situations where an employee might want to initiate settlement discussions. You may be unhappy in your role and want to leave but cannot afford to resign without a financial cushion. You may have concerns about the way you have been treated and want to resolve matters without the stress of a tribunal claim. You may be facing a redundancy or restructuring and want to negotiate better terms than the statutory minimum.
How to Approach the Conversation
Before initiating any settlement discussion, take legal advice. A solicitor can help you assess the strength of any claims you might have, advise on a realistic settlement figure, and help you frame the conversation in a way that protects your legal position. Going in without preparation can undermine your negotiating position and, in some cases, your legal rights.
What Happens If the Employer Refuses?
If you initiate settlement discussions and your employer refuses to engage, the protected conversation or without prejudice framework means that your approach cannot generally be used against you in tribunal proceedings. Your employment continues on its existing terms. You retain all your employment rights and can still bring tribunal claims if your employer subsequently acts unlawfully.
Whether you have been offered a settlement agreement or are considering initiating negotiations yourself, PDA Law can advise on your position, the value of any claims, and the best approach for your circumstances.