Settlement — overview

If an employee has a claim it can either be settled before employment tribunal proceedings are issued, or at any time afterwards up until judgment.

However, there are statutory protections ('the contracting out provisions') which ensure that parties cannot agree to compromise an employee's rights under the employment legislation, unless certain conditions are met. This means that claims may only be settled by one of a limited number of routes that are expressly approved under statute.

Compromise agreements

Compromise agreements are agreements which, if they comply with specific conditions, enable an employee (or worker where appropriate) and employer to agree that the employee will not pursue a claim or claims against the employer. This is usually in return for compensation for the employee.

Most employment legislation allows for this exception to the contracting out provisions, and the required conditions are much the same in each set of relevant provisions.

Such conditions include:

• that employees must get independent advice on their claim or claims, and the compensation that might be awarded if such claims are successful, and

• that the parties must identify specific claims or potential claims which have already been raised between the parties, in order validly to compromise them

Compromise agreements can be used before tribunal proceedings have been issued as well as afterwards.

Acas conciliation

Acas has a duty to conciliate in almost all tribunal proceedings which have been issued, and will do so if requested by the parties. What Acas will not do is rubber stamp an agreement where it has not been involved in the conciliation.

If Acas successfully conciliates a settlement, this is recorded in a document known as a COT3. This is another exception to the contracting out rules: an Acas conciliated agreement is binding on the parties and prevents the claimant from pursuing the conciliated claims further.

Tribunal order

Sometimes settlement does not occur until the parties are at the employment tribunal hearing. In those circumstances, the tribunal is able to make an order for settlement in the terms agreed by the parties. If the tribunal agrees to do so, the provisions of the settlement are binding.

Withdrawal/dismissal of proceedings

In the event that a claim or claims have been issued and settlement is reached, it is usually a condition of the settlement that the claimant will withdraw the claim. Withdrawing the claim means that the claimant can no longer continue with the proceedings that were set in motion by the submission of that particular ET1 claim form.

It is then up to the respondent to apply for the proceedings to be dismissed. It is only once the proceedings are dismissed that a claimant will no longer be able to bring fresh claims based on the same facts. If a claim is withdrawn but not dismissed, it will be open to the claimant to bring a fresh claim based on the same facts.

Arbitration/mediation

There is a specific arbitration procedure for a limited number of claims which is regulated by Acas. This is not commonly used.

There is currently no universal formal process of mediation in employment tribunals, although a trial into the use of judicial mediation, ie mediation by employment judges, has been carried out in certain regions. Mediation services are, however, available to parties at any time throughout an employment relationship where there are issues to resolve. If the parties wish any agreement arising out of such mediation to be binding, it must comply with the contracting out provisions.