Employers, and sometimes employees, initiate discussions with a view to going separate ways. Employers sometimes initiate discussions to avoid going through a disciplinary process or a retrenchment procedure and sometimes just to get rid of an employee for what is perceived to be in the best interest of the company where the employer has no permissible legal ground to terminate employment.
Employers are sometimes hesitant to initiate any separation discussions because they are afraid that by doing so they may convey to the employee that they do not have a case, while they believe that they would be successful with a disciplinary or other process. They may also be concerned that the unsuccessful discussions may be used against them in later proceedings to establish an improper motive for the proceedings that follow.
Protection for the employer party (and the employee who wishes to initiate the discussions) is to be found in the 'without prejudice' rule.
'Without prejudice' is called a privilege. However, in reality, it is not a privilege but a right to make certain admissions that are inadmissible in later proceedings. The rationale for the 'without prejudice' rule is that the law encourages parties to settle disputes prior to formal legal action with its accompanying legal expenses, delays, hostility and inconvenience by having a full and frank discussion in a climate where parties can negotiate openly without the fear that what was communicated will later be used against them (see Naidoo v Marine and Trade Insurance Co Ltd 1978 3 SA 666 (A) 667).
In South Africa, the protection applies regardless of whether or not 'without prejudice' is written on the correspondence. The Courts will consider the contents of the communication to determine whether the communication is protected or not (see Jili v SA Eagle Insurance Co Ltd 1995 (3) 269 (N) at 275).
The primary criterion for protection is that the parties must negotiate in good faith to resolve a dispute. Threats of litigation do not impede on the protected nature of the communication, although if a threat is made that indicates that the offer was not made in good faith then it stands to reason that the communication will later be permissible as evidence.
The case of Naidoo set the standard in South Africa to the effect that without prejudice protection will apply to communications or statements that are not wholly unconnected to the negotiations. If the statement is irrelevant but in some way connected to the negotiations it is still protected.
The second important point is that there must be a dispute that the parties are attempting to resolve.
There is no doubt that the rule will find application when the employer and employee enter into negotiations after the employee has been informed of pending disciplinary or retrenchment proceedings as those proceedings will create a dispute between the parties to be resolved through an appropriate process. Attempts to settle these disputes will invoke the rule provided the negotiations are in good faith.
But what if the employer enters into discussions where no formal processes are invoked or contemplated?
In the United Kingdom case of BNP Paribas v Mezzotera  IRLR 508 EAT, the employee raised a maternity leave related grievance. In a subsequent meeting, the employer suggested that they terminate the employment by mutual consent and offered a settlement package. She launched claims of sex discrimination and victimisation. While the meeting was referred to as 'without prejudice', the Employment Appeal Tribunal found that the principle did not apply as there was no dispute but merely a discussion regarding the grievance.
In the more recent British case of Portnykh v Nomura International (UKEAT/0448/13/LA), however, it was stated that the principle could be applied to discussions which even relate to a 'potential dispute'. In this instance, an employee was dismissed for misconduct while the employee contended in later proceedings that it should have been by reason of redundancy. This has not been tested by our law.
Communications during general mediation proceedings are protected (see Waste-Tech (Pty) Ltd v Van Zyl and Glanville NNO 2002 1 SA 841 (E)). Mediation proceedings in their nature attempt to resolve an existing dispute through negotiations under the auspices of a third party.
Employers are well advised to enter into discussions of this nature only where there is a dispute. In the absence of a dispute, the communications are not protected against disclosure and may be used in subsequent proceedings.