Solicitors for employers quite often write letters with this heading. It means the letter – because it is an attempt to settle the claim – can’t be shown to the tribunal before or during the main part of the hearing. But the ‘save as to costs’ bit means that if you refuse the offer and then either lose, or get awarded less than they have offered, they may show the tribunal the letter in support of an application for costs at the end of the case. Their argument will be that your refusal of the offer amounted to unreasonable conduct of your case.
This is a tactic claimants can use, too – though they do so much less often.
If you think your employer has no reasonably arguable defence to your claim, you can try writing a letter headed ‘without prejudice save as to costs’ that offers to settle the claim, and warns them that if they don’t agree, you may apply for costs against them if you win and get what you’ve asked for.
This works best if the value of your claim is clear, and doesn’t involve much crystal-ball gazing. If you were unfairly dismissed and you’re claiming a long period of future loss, there will be altogether too much wiggle-room in estimating the value of your claim, even if the unfairness is obvious. But if you’re claiming a definite sum – say, for example, you’re claiming £652.24 in unpaid expenses, or you were only out of work for 2 months after an unfair dismissal before getting another job that paid just as well as the old one, so your loss is exactly quantifiable as your basic award plus 2 months’ net earnings – and the respondent has no sensible defence, it’s a tactic worth trying. There’s a sample letter at page 175 of Employment Tribunal Claims, 3rd edition (or you can download an earlier version from the first edition here).