The “without prejudice” rule exists to encourage parties to settle their disputes without resort to litigation. The rule is that where there is a dispute between parties, any written or oral statement made in a genuine attempt to resolve the dispute will not be admitted in evidence at a subsequent hearing of the employee’s claim. This enables parties to negotiate freely. Employers are happy to offer settlement without the risk of appearing to admit liability. To ensure that statements made during settlement negotiations are privileged then it must be clear to both parties in advance that their negotiations are “without prejudice”.

Difficulties arise for employers who are concerned not only that employees will seek to refer to the negotiations in order to show the level of settlement being offered, but also to rely on any discussion to commence a claim for victimisation in discrimination proceedings.

Recent cases have examined the extent of the “without prejudice” rule in employment relationships and what an employer should, and should not, do in relation to his employees.