Employment Law: Without Prejudice?

When faced with an underperforming employee, the offer of a pay-off in an "off the record" chat may sometimes appear to be the best option to avoid the stresses, strains and management time involved in the performance improvement procedure. A meeting may be called where settlement options under the description of "without prejudice" are offered. While this approach may still be worthwhile in certain situations, employers need to be careful at any such meeting.

THE WITHOUT PREJUDICE PRINCIPLE

The without prejudice principle can be used to protect "off the record" discussions so long as a genuine dispute exists between the parties and the without prejudice communication is a true attempt to settle the dispute. The principle is designed to encourage frank discussion and aid settlement.

It was thought that providing that a meeting was stated to be "without prejudice", any discussions could not later be submitted in evidence at subsequent hearings. This meant that when faced with an employee that you wanted to be rid of, if you held a without prejudice discussion where a pay off was suggested but turned down the discussion and the offer could not later be relied on to substantiate any claim. In such a situation an employee may, for example, bring a constructive dismissal claim alleging that you had eroded all trust and confidence that existed between you by making an offer of pay off. However, it was believed that so long as the employer had caveated the meeting as without prejudice the claim would fail as the very evidence he sought to rely on would be inadmissible. However the recent case of BNP Paribus v Mezzotero has considerably limited the scope of the without prejudice rule in relation to employment termination negotiations.

BNP PARIBUS V MEZZOTERO

In Mezzotero the employee, a woman employed as a vice president at an investment bank, was encouraged not to return to her usual duties following her second period of maternity leave. She was told at her pre-return to work meeting that the market was difficult and that her old role was no longer available but that if she wanted to return to work she should find another role within the bank. Ms Mezzotero raised a grievance claiming that she was being demoted and humiliated by these actions and she concluded that this treatment could only be explained by either the fact that she had been on maternity leave; or that she was a woman.

In response to the grievance being raised Ms Mezzotero was...