Keep formal meetings and without prejudice meetings entirely separate.
It is usually preferable if the employee is the one to initiate without prejudice discussions. If he/she does so in a formal meeting, explain that you will need to adjourn (or finish) the formal meeting first. This should be noted in the meeting minutes and any notes taken as part of the without prejudice discussions should be kept separate as well. You may also wish to consider having the meetings in different rooms to make clear the distinction between the “open” and “without prejudice” meetings.
Avoid having a without prejudice discussion as the “opening shot”
If you need to initiate discussions, start the conduct or performance management procedure first. Failure to do so may lead to allegations by the employee that the without prejudice meeting is not genuinely without prejudice as a dispute has not yet arisen. There have been two recent Court of Appeal decisions on the “without prejudice rule”. Whether or not it applies turns to a large degree on the particular facts of a case, but it is doubtful that it will apply where there is no risk that the employee’s employment will be terminated or where there is no real dispute between the parties.
Explain the meaning of “without prejudice”
When you invite an employee to attend a without prejudice meeting, explain that it will be without prejudice and what this means, namely, that anything discussed at the meeting by either party without prejudice to their respective legal positions. The discussions are being entered into in the hope of resolving potential disputes between the parties and the parties will not be able to refer to such proceedings in any subsequent court or tribunal proceedings relating to the disputed matters. Do not wait until the meeting itself to do this, but do restate the point at the meeting. Make it clear that it is up to the employee whether he/she attends the meeting and agrees for the discussions to be on a “without prejudice” basis.
Stand by your formal “open” position, but make it clear that you are also prepared to consider reaching an amicable settlement.
Consider the types of claim the employee may bring and the prospects and value of those claims, taking advice if necessary. It is often sensible to open negotiations with a realistic offer, but one that leaves some room for manoeuvre. The employee may well have a wildly optimistic view of his/her own position, but may change their tune after taking legal advice. If your initial position is a realistic one it maintains goodwill and can assist reaching a swift, satisfactory settlement as opposed to an opening position which is unrealistically low, which could inflame the situation.
Do not take your eye off the formal process
Employers are often inclined to stop the formal process once without prejudice discussions are under way. However, this leaves nothing to fall back on if without prejudice discussions break down, and this significantly weakens both the employer’s legal and commercial bargaining position. Continuing the formal process can help maintain pressure on the employee to reach a settlement and protects the employer’s position should without prejudice discussions fail. In some situations, it may be appropriate for both parties to agree to put the formal process on hold temporarily, rather than stop it entirely, however it would be advisable to ensure that there is a paper trail showing the employee’s agreement to such postponement.
Look at the bigger picture
Try to avoid becoming stuck on trivial points, but be aware that small gestures (such as an agreed reference or continuing medical cover for a short time) can be put on the table later in negotiations and mean a great deal to employees. Think about whether there are any easy “gives” you can offer, which may make a less generous financial settlement offer more palatable for the employee.