"I'm not sure this is working out ... can we speak "off the record" ... ?"
Many employers are of the view that once the employer states that a conversation with an employee is "off the record" or "without prejudice" anything that is said during that conversation cannot be disclosed by the employee in any subsequent legal proceedings. This is not the case.
The "Without Prejudice" Rule.
In general, the without prejudice rule prevents the parties to a dispute from disclosing any previous negotiations (oral or written), which genuinely attempt to settle that dispute, in subsequent legal proceedings. Normally, without prejudice discussions occur between lawyers for parties in a dispute, but they can occur between the parties themselves. However, difficulties often arise in an employment context when an employer may wish to have an "off the record" conversation with an employee (possibly about an exit from the business). There is very little Irish case law dealing with this issue and no Irish legislation in the area. Proposals have recently been formulated by the UK Government to regulate without prejudice conversations between employers and employees, which highlight the lack of clarity in Irish law.
When Will "Without Prejudice" Conversations be Protected in Ireland?
It is important to note that the mere use of the term "without prejudice" will not guarantee that any negotiations (whether oral or written) are protected from disclosure. The law in this area has been developed by both the Irish and UK Courts over time, but certain important principles have been established.
Firstly, the parties must agree, in advance, that the discussion is "without prejudice" and both parties must understand what they are agreeing to. This issue of informed consent may cause significant difficulties in an employment context where there is often scope for an employee to claim that he or she did not understand what was meant by the term "without prejudice", even if the employer explains the meaning of the term at the beginning of the conversation. It is not advisable that employers label a conversation or correspondence as "off the record", as that term has no strict legal meaning.
A Legitimate "Dispute" Between the Parties.
Secondly, it is very important to understand that for discussions to be truly without prejudice there must be a dispute in existence between the parties (in respect of which legal proceedings had commenced or were contemplated) and any discussions between the parties must be a genuine attempt to settle that dispute. If the employee has lodged a claim against the employer in the Rights Commissioner Service or the Employment Appeals Tribunal then it is likely that this would be regarded by a Court or tribunal as a legitimate dispute, but if an employee simply lodges an internal grievance with the employer then this is unlikely to qualify.
Take the following example. An employee lodges a grievance with her employer in respect of the way she had been treated leading up to and following her return from maternity leave. She claims that her job has changed fundamentally and asks for the issue to be resolved. Her employer then calls her to a meeting and informs her on a "without prejudice" basis that it is best that her contract of employment is terminated. The employer offers her a severance package and informs her that the termination would be treated as a redundancy. The employee subsequently takes a claim to the Equality Tribunal for discrimination and victimisation on gender grounds and attempts to rely on the manner in which her grievance had been handled and the events of the "without prejudice" meeting as evidence of discrimination. Would the conversation that took place at the grievance meeting and any subsequent correspondence be protected from disclosure?
The UK Employment Appeals Tribunal has held in a similar situation that such communications could only be truly without prejudice if they were made in a situation where there was a genuine attempt to settle an existing dispute. The UK EAT was of the view that the fact that an employee had invoked the grievance procedure did not necessarily mean that the parties were in dispute and, in any event, the meeting that was held could not be said to be a genuine attempt to settle the employee's grievance (See B v M  IRLR 508).
The same issues would be likely to arise in circumstances where an employer brings disciplinary proceedings against an employee. Would a without prejudice discussion between the employer and employee where the employee is offered an exit package be a genuine attempt to settle a dispute in existence between the parties (in respect of which legal proceedings had commenced or were contemplated)? In most circumstances, the answer would be no.
"Without Prejudice" Privilege Cannot be Abused.
The High Court in Ireland has found that details of without prejudice negotiations may be admitted where it could be clearly shown that greater damage to the interests of justice would be effected by non-admission than by disclosure (Moorview Developments  ILRM 262). For instance, if an employer made certain admissions in without prejudice negotiations and then attempted to deny those matters at a later stage in defence of an unfair dismissal claim, this could allow the employee to disclose relevant details of the negotiations.
Recent UK proposals, published in the Enterprise and Regulatory Reform Bill, would provide employers with a specific statutory right to have a discussion with an employee in relation to the termination of their employment without the employee being able to use that conversation in a claim for unfair dismissal. However, the proposal also has protections for employees, stating that a conversation would not be protected where an employment tribunal considers that the employer has done or said anything which could be construed as being improper or where the dismissal is in breach of Equality legislation. There is an absence of Irish law in relation to without prejudice conversations in an employment context and similar Irish legislation clarifying the position would be welcome.
Best Course of Action?
On the basis of current Irish law, making a without prejudice offer to terminate employment is a very risky course of action for an employer to take and may result in the employee claiming unfair dismissal and using the offer as evidence of dismissal. In contentious matters, the prudent course of action is for the employer to seek legal advice as, depending upon the circumstances of the case, it may be more appropriate for the employer's solicitor to seek to negotiate a termination with the employee's legal representative. This has the effect of formalising the negotiations and makes it much more difficult for the employee to claim at a later date that he or she did not understand the without prejudice nature, or terms, of any offer.