Why the Legal Framework Matters

Mediation’s effectiveness depends to a very significant degree on its confidential and
without prejudice character. If parties could not speak freely in mediation without fear
that what they said would be used against them in subsequent proceedings, they would not
speak freely, and the mediation would fail to produce the kind of honest, exploratory
conversation that makes resolution possible. Understanding the legal framework that
protects mediation, and the limits of that protection, is therefore essential for anyone
participating in workplace mediation or
employment mediation.

This chapter covers the key legal concepts of confidentiality and without prejudice
protection in the mediation context, the specific statutory protection available under
section 111A of the Employment Rights Act 1996, and the circumstances in which those
protections can be lost or limited.

Confidentiality in Mediation

The confidentiality of mediation operates at two levels. The first is the contractual
confidentiality created by the mediation agreement that the parties sign before the
process begins. That agreement will typically contain provisions confirming that the
mediation is confidential, that neither party will disclose what was said during the
mediation to anyone not involved in it, and that the mediator will not disclose to
one party what was said to them in private by the other party without express permission.

The second level is the legal protection created by the without prejudice rule, which
operates independently of the contractual confidentiality and provides a further layer
of protection for what is said during settlement negotiations.

Contractual confidentiality binds the parties and the mediator but does not, by itself,
prevent the contents of the mediation from being disclosed in court or tribunal proceedings
if a party chooses to refer to them. The without prejudice protection is the more
important shield against that risk.

The Without Prejudice Rule

The without prejudice rule is a fundamental principle of English law that protects
genuine attempts to settle a dispute from being used as evidence in subsequent proceedings.
Its rationale is that if parties are to engage in meaningful settlement discussions,
they must be able to do so without fear that offers made or concessions explored will
be used against them if the settlement fails and the matter proceeds to litigation.

For the without prejudice rule to apply, two conditions must generally be met. First,
there must be an existing dispute between the parties. Second, the communication or
discussion in question must represent a genuine attempt to settle that dispute. Where
those conditions are met, anything said or written in the course of the settlement
discussion is protected from disclosure in any subsequent proceedings.

Mediation is the paradigm case of a without prejudice process. Everything said in a
mediation session, including offers made, positions explored and concessions considered,
is protected by the without prejudice rule. Neither party can refer to what was said in
the mediation if the matter subsequently proceeds to tribunal or court, except in the
limited circumstances described below.

Section 111A of the Employment Rights Act 1996

Section 111A of the Employment Rights Act 1996 provides an additional and distinct
layer of protection for pre-termination negotiations. It applies specifically to
conversations or negotiations in which an employer makes an offer to an employee to
end their employment on agreed terms, and provides that those negotiations cannot be
referred to in any subsequent unfair dismissal proceedings.

The significance of section 111A is that it extends protection to conversations that
might not otherwise be covered by the without prejudice rule, for example where there
is no existing formal dispute between the parties but the employer wants to explore
whether the employee would accept a settlement of their employment. This allows employers
to have frank conversations with employees about potential exit arrangements without
the risk that those conversations will be disclosed in unfair dismissal proceedings if
the employee rejects the offer and subsequently brings a claim.

Section 111A protection is not, however, available in all circumstances. It does not
apply where the employer has behaved improperly in the course of the negotiations, for
example by putting undue pressure on the employee or by making threats. It also does not
extend to claims other than unfair dismissal, so it will not protect conversations from
disclosure in discrimination proceedings.

Exceptions to Without Prejudice Protection

The without prejudice rule is not absolute. There are circumstances in which without
prejudice communications can be referred to in subsequent proceedings. The most
important exceptions in the employment context are the following.

1. Unambiguous impropriety

Where a party has engaged in conduct during the without prejudice negotiations that
amounts to fraud, misrepresentation, undue pressure or other serious impropriety, the
court or tribunal may allow that conduct to be referred to in subsequent proceedings
notwithstanding the without prejudice protection.

2. Disputes about the existence or terms of the settlement

Where the parties dispute whether an agreement was reached in the mediation, or what
its terms were, those communications may be referred to in proceedings designed to
resolve that dispute. The without prejudice rule is designed to protect settlement
discussions, not to prevent a party from enforcing a settlement that was actually reached.

3. Other exceptions

There are other limited exceptions, including cases where the communications are
relevant to an issue in subsequent proceedings that is distinct from the substantive
dispute being mediated. Legal advice should be sought in any case where there is a
question about whether without prejudice protection applies or has been lost.

Practical Implications for Parties in Mediation

The practical implications of the confidentiality and without prejudice framework for
parties in mediation are as follows.

• You can and should speak openly in mediation about your true position, your
  concerns and what you would accept, without fear that those statements will be
  used against you if the mediation fails.
• Offers made in mediation cannot generally be disclosed in subsequent proceedings
  as evidence of what you were willing to accept.
• The mediator cannot be called as a witness in subsequent proceedings to give
  evidence about what was said during the mediation.
• Any agreement reached in the mediation should be recorded in writing before the
  session ends, as it is the written agreement that creates the legally binding
  commitment rather than the verbal discussions that led to it.
• You should not behave in a way during the mediation that could be characterised
  as improper, as this risks losing the without prejudice protection for the
  entire process.

Legal Risk and the Decision to Mediate

Mediation also interacts with legal risk in another important way. For employers in
particular, the decision about whether and when to mediate has significant implications
for their legal exposure. An employer who unreasonably refuses to engage with mediation
when it is offered may face adverse costs consequences in tribunal proceedings, even
if they ultimately succeed on the merits of the claim.

Conversely, an employer who uses mediation at the right stage can often resolve a dispute
for significantly less than the cost of defending a tribunal claim, even in cases where
the employer would have succeeded at tribunal. The legal costs of defending a tribunal
claim, the management time involved, the disruption to witnesses and the reputational
implications of public tribunal proceedings are all factors that make mediation
attractive from a risk management perspective, quite apart from its effectiveness as
a resolution tool.

The key cases on the consequences of refusing to mediate are examined in
Chapter 17.

Important Disclaimer: This page is provided for general information purposes
only and does not constitute legal advice. Nothing on this page should be relied upon in
respect of your legal rights or obligations. Before taking or refraining from taking any
action in connection with a workplace or employment dispute, you should obtain advice from a
qualified solicitor or barrister with relevant expertise. If you would like advice on your
specific situation,
contact Robin here.