In one case an employee raised a grievance about the way she was being treated following her return from maternity leave.  Her employer responded by informing her “without prejudice” that it was best if she left, and offered her a limited severance package described as a redundancy.

The employee refused, resigned, and claimed constructive dismissal.  The employer’s efforts to exclude the without prejudice offer from the hearing were unsuccessful, and the employee used that offer as evidence of unfair treatment by the employer.  The employer lost that case as a result.

The employer was trying to make the offer “off the record” but failed, with dire consequences.

A sure way to create an unjustified dismissal is to make a “resign or be dismissed” ultimatum to an employee.  While tempting (particularly where there seems to be overwhelming evidence of serious misconduct such as theft) this is never a safe option.

The ultimatum opens up the employer to the risk of a claim of constructive dismissal, or to suggestions that dismissal was inevitable.  This approach regularly results in successful unfair dismissal claims.

If you do want to use without prejudice communications to settle a dispute, and for them to remain off the record, they must be a genuine attempt to settle an existing dispute.  The key words are “genuine”, and “existing”.  When used properly “without prejudice” offers remain a useful way of trying to resolve employment disputes.

If you raise a concern about employee misconduct, and at the same time launch into a without prejudice offer for them to depart, you are not trying to resolve an existing dispute.  Rather, you are quite obviously trying to short-cut the proper process.

It is not safe to assume that “without prejudice” communications will be excluded as evidence at an unfair dismissal hearing at the Employment Relations Authority or Court.

A few pointers …

Never start a disciplinary process with a without prejudice discussion – wait until after you have commenced the proper investigation process.

Ensure you get the employee’s agreement to having without prejudice discussions, in advance of any such discussion.  Make sure the employee knows what the phrase means, and only proceed if the employee is willing to have such a discussion.

Use your lawyer to send any without prejudice offers, rather than using in-house staff.

Always ensure you continue your normal disciplinary process, even when negotiations off the record are continuing.  Don’t delay your investigation process simply because you hope you might reach a negotiated outcome.

Where there is a dispute, get agreement to attend a Mediation Service mediation.  Everything said in a formal mediation is protected from being used in an Authority hearing, and is the safest way to approach an employee with a severance offer.

Attempts to shortcut a disciplinary process by ultimatums or offers to leave are dangerous.  Make sure you follow the correct process as a failure to do so can be very expensive.