Protected conversations before a settlement

The conversation in which an employer proposes an agreed exit is the most dangerous part of a settlement, because if it is not protected the employee can tell a tribunal that the employer had already decided to get rid of them. The law gives two kinds of protection: the protected conversation, which covers ordinary unfair dismissal claims and needs no existing dispute, and the without prejudice rule, which covers any claim but needs a genuine dispute and a genuine attempt to settle it. Each can be lost by what the employer says. This page explains both, and every settlement agreement I draft comes with a note on how to have the conversation in the particular case, for a fixed fee of £795 in three working days.

Who this is for

Employers in England and Wales who are about to propose a settlement to an employee and want to know what they can say, and employers who have had the conversation already and want to know whether it was protected.

What matters in a protected conversation

What a protected conversation is and what it protects

Section 111A of the Employment Rights Act 1996 provides that evidence of pre-termination negotiations (an offer made or discussions held with a view to the employment ending on agreed terms) is inadmissible in a claim for ordinary unfair dismissal, whether or not there was an existing dispute, so that an employer can propose an exit to an employee with whom it has no dispute without the proposal being used against it; the protection covers the offer, the discussions and the written terms, applies to both sides, and lasts whether or not a settlement is reached, which is what lets an employer say 'we would like to propose an agreed departure' to an employee who is not performing.

What it does not cover and when without prejudice applies instead

The protection under section 111A does not apply to claims for discrimination, whistleblowing, automatically unfair dismissal, breach of contract or anything other than ordinary unfair dismissal, so where the employee could bring one of those claims the conversation is admissible in that claim unless the without prejudice rule applies, which requires an existing dispute (a grievance, a complaint, a disputed disciplinary, a solicitor's letter) and a genuine attempt to settle it; the practical rule is that an employer proposing an exit to an employee who has raised nothing relies on section 111A and should keep the conversation to the proposal, while an employer responding to a dispute marks the conversation without prejudice and relies on the rule, and the note says which applies and why.

Improper behaviour and how the protection is lost

Section 111A does not apply where there has been improper behaviour, which the Acas Code of Practice on settlement agreements illustrates: harassment, bullying or intimidation, physical assault or threats, victimisation, discrimination, putting undue pressure on the employee (not giving reasonable time to consider the offer, saying the employee will be dismissed if they refuse before any process has started, threatening a worse outcome), and the without prejudice rule is similarly lost by unambiguous impropriety; the note lists what the employer must not say, because the sentence that loses the protection is usually said in frustration and sounds reasonable to the person saying it.

How to open the conversation and what to say

The employer should arrange a private meeting, state at the outset that it is a protected conversation (or a without prejudice discussion) with a view to agreeing the employee's departure, explain briefly and neutrally why the employer is proposing it (the role has not worked out, the business is changing, the relationship has broken down), set out the proposal (the leaving date, the payment, the reference, the adviser's fees), say that the employee is not obliged to accept, that they should take independent advice at the employer's expense, that they have a stated time to consider it, and that if they decline the employer will continue with the ordinary process; the note gives the employer the words for the particular case and the reasons for each.

The written offer, the time to consider it and the Acas Code

The Acas Code expects the proposal to be put in writing (a letter setting out the terms, with the draft agreement), the employee to be allowed to be accompanied at the meeting as good practice, and the employee to be given a reasonable period to consider the offer, which the Code says is at least ten calendar days unless the parties agree otherwise; an offer that expires sooner, or that is made orally with no written terms, invites the argument that the pressure was undue, and the note includes the offer letter and the timetable.

Recording the conversation and what happens if the employee refuses

The employer should keep a note of the meeting (what was said, by whom, the terms offered, the time given), marked as protected or without prejudice, kept apart from the employee's ordinary file, because the record is what shows that the conversation was conducted properly if it is ever examined; if the employee refuses, the employer continues with the ordinary process (performance, conduct, redundancy) from where it was, without reference to the offer, and the employee's refusal is not a reason for anything; the note explains how to pick the process up so that the settlement proposal does not contaminate it, which is the point of the protection.

What it costs

Settlement agreement, £795. Drafted for your situation, with a note on how to have the conversation. Three working days.

Settlement agreement including reasonable negotiation with the employee's adviser, £995. The agreement in three working days. The negotiation then runs until the agreement is signed or it becomes clear it will not settle. Reasonable negotiation means what, in my experience, amounts to the standard back and forth on a settlement agreement. If the employee or their adviser is being unreasonable, for example by conducting themselves unprofessionally or requiring a substantial rewrite that needs material further legal advice to you, I will flag it and we will discuss how best to proceed, which may involve further fixed-fee work. That would be unusual.

Buying online forms the engagement on payment. The scope is what the settlement agreements for employers page describes, you accept the Terms of Service at checkout, and I email you within four working hours to get started. If you would rather ask something first, email me.

What you get

• A bespoke settlement agreement drafted for the exit you are dealing with
• Proper waiver of the relevant statutory claims, so the agreement does what you are paying for
• Advice on the tax treatment, including the £30,000 exemption and what falls outside it
• Confidentiality, non-derogatory statements and an agreed reference
• Reaffirmation or replacement of restrictive covenants, which is often the real value
• A short note on how to open the conversation and keep it without prejudice or protected
• One round of amendments after the employee's adviser responds

What is not included

• Advising the employee, which their own adviser must do independently for the agreement to be valid
• Tribunal representation if the matter does not settle
• Payroll processing of the settlement sums
• Handling the settlement payment, since I do not hold client money

Questions I am often asked

Can we propose an exit to an employee we have no dispute with?

You can, in a protected conversation, for ordinary unfair dismissal purposes, with no improper behaviour and a reasonable time to consider. Where the employee could claim discrimination or whistleblowing the protection does not apply and the without prejudice rule needs a dispute.

What must we not say in the conversation?

Anything that puts undue pressure on the employee: that they will be dismissed if they refuse, that the offer is only open today, anything about their complaints or protected characteristics. The note lists the words to avoid for the particular case.

We had the conversation before taking advice. Was it protected?

If there was no existing dispute, no improper behaviour and the only claim in prospect is ordinary unfair dismissal, probably. If the employee had raised a complaint or could allege discrimination, possibly not. Tell me what was said and I will say which.

Related guidance and services

• Settlement agreements for employers, £795, the service this page describes
• Employment contracts and handbooks, £595
• Shareholders agreement, £995
• Settlement agreement and the employee's independent adviser
• Settlement agreement when the employee will not sign

This page is general guidance for businesses in England and Wales, not advice on your own circumstances. Last reviewed: October 2026. Email geoffrey@caesar.co.uk.