The EAT has confirmed that there is clearly a “potential dispute” giving rise to “without prejudice” protection where an employer has announced an intention to dismiss the employee for misconduct and then negotiated with the employee about an alternative manner of dismissal. This was so regardless of how amicable the negotiations seemed to be: there is no need for any specific complaint such as unfair dismissal to have been raised.

Previous case law has cast some doubt over when there can be said to be a “potential dispute” on a termination, so this is helpful to employers seeking to protect their negotiations.  However, it cuts both ways: in this case it was the employer who wanted to rely on the protected evidence to show that the redundancy structure was the employee’s suggestion.

The parties had accepted that earlier conversations, prior to the exchange of documents marked “without prejudice”, were admissible and the EAT noted that this was correct. The without prejudice rule can apply in principle even if a “without prejudice” label has not been attached, but “the attachment of the label represents a convenient watershed, which should not be displaced except in the clearest of circumstances on the clearest of evidence”. (Portnykh v Nomura International plc, EAT)