If you have received a compromise agreement to settle an employment dispute, it is probably marked "Without Prejudice and Subject to Contract". But what does this mean?

"Without Prejudice" mean that the compromise agreement cannot be used in evidence. If negotiations break down and Employment Tribunal proceedings become necessary, you will not be able to show the draft compromise agreement to the judge.

The purpose of the "Without Prejudice" rule is to enable parties to negotiate freely without being concerned that anything they say may be used in evidence. Sometimes a party may want to admit fault in an attempt to achieve a settlement. Or they may simply want to acknowledge that certain allegations will be difficult to prove.

Concessions such as these can help wheel the oils of the negotiations. However, if parties felt that anything they say could be used against them, they will be much more guarded in their discussions.

Before a compromise agreement is signed, it may be sensible to delete the words "Without Prejudice" from the final draft. However, the compromise agreement will usually state that, although it is marked "Without Prejudice", once it is signed, it becomes a legally binding agreement.

If either party breaches its terms, it can be used in evidence.

There are a few exceptions to the "Without Prejudice" rule. Sometimes, evidence of "Without Prejudice" communications can be used in evidence. For example, where the "Without Prejudice" negotiations led to a delay in dealing with a disciplinary process, the Tribunal may allow the employer to produce evidence of this in order to establish that there was a good reason for the delay. Otherwise, it may look like the employer did nothing for several weeks! However, the general rule is that "Without Prejudice" communications are not disclosed to the judge!

Usually, a draft compromise agreement is also headed "Subject to Contract". This means that it is not a legally binding agreement until all parties have signed it.

The significance of this is that the compromise agreement can be withdrawn at any time before it has been signed. Be careful if you are thinking about refusing the offer in the compromise agreement. If you refuse the offer and then change your mind, it may be too late. The employer is under no obligation to make the agreement available for acceptance for any length of time. If you make a counter-offer, it amounts to a rejection of the original offer.

If you have received a compromise agreement, it is important for you to obtain good legal advice on what you are being offered. The compensation should reflect your financial losses for the length of time that you are likely to be out of work. You may also be entitled to compensation for injury to feelings if your employer has discriminated against you.

Finding an experienced solicitor with plenty of experience of negotiation is a good way to ensure that you are protected and that you can get the best advice on whether to accept or refuse an offer of a compromise agreement.