Without Prejudice

You may have see the words ‘without prejudice’ plus ‘save as to costs’ or ‘subject to contract’. This guide explains why lawyers use these terms and what they mean.

What does ‘without prejudice’ mean?

If something is described as ‘Without prejudice’ is means it cannot be used against them in any current or future legal or court proceedings regarding the issue being discussed. The purpose of this ‘without prejudice rule’ is to allow parties to speak freely in an attempt to settle claims without fear that what they say may be used against them.

What does ‘Without Prejudice Save as to Costs’ mean?

We asked Charles Millett Employment Partner at Morecrofts LLP to explain all…

The phrase “without prejudice save as to costs” is a term used in law to identify that discussions and offers made to resolve disputes cannot generally be disclosed to courts or tribunals, except where the issue of legal costs is being determined.

For example, if an employer wishes to put an offer to an employee, they will not want the employee to be able to refer to that offer in the event of negotiations breaking down and a tribunal claim being pursued.  If the tribunal learned that the employer had been willing to offer the employee say £10,000 to settle their claims, there is the risk that they might consciously or subconsciously perceive that the employer had something to hide and that it acknowledged it had been in the wrong.

Equally, from an employee’s perspective, if during negotiations they stated they would accept £15,000 to settle their claims, they would not want the tribunal to be aware of this.  If the tribunal knew that an employee had been willing to accept £5,000 in a claim that might be worth potentially £50,000, they might draw an inference that the employee knew there were major weaknesses in their claim.

The fact that the “without prejudice save as to costs” phrase is used does not in itself mean that discussions or conversations will be treated as being protected from disclosure at tribunal.  The key issue is whether the nature of those discussions and negotiations are to settle an existing dispute.

Awards of costs in employment tribunal cases are still very much the exception rather than the norm.  Employees should therefore not worry about having to pay the employer’s costs just because an offer letter is headed “without prejudice save as to costs”.  It is simply a standard term.  Often settlement agreements and offer letters will be headed “without prejudice and subject to contract” which sounds much less daunting to an employee who is unfamiliar with the process.  

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Answer given on 28 May 2014.