Employment Tribunals

6. Agreed Settlements

Reaching a settlement, without waiting for the tribunal, may well be in your best interests.

In discrimination cases, where awards can be large and hard to predict, an agreed settlement removes the risk of a shock result.

6.1 A settlement may include a cash sum and other negotiable elements.

• The settlement usually involves money and a reference, with agreed wording, if the employee has been dismissed. This reference is a key bargaining counter. No-one can usually oblige you to give a reference that does anything more than confirm the dates of employment, and the employee may need more than that.
• A confidentiality clause may be a valuable part of the deal - something you cannot get from a tribunal, even by winning. Realistically, though, details of the settlement may still leak out. Bear in mind the impact of this on other employees.

6.2 There are two main routes to reaching a settlement.

• Conciliation through Acas can frequently lead to a legally binding agreement, known as a COT3 settlement.
• You can use a 'compromise agreement', under which the employee receives independent legal advice and can then waive his or her statutory employment rights, in return for an agreed settlement. These agreements are legally binding and can be drawn up before or after a claim has been brought. The employer usually pays the employee's legal costs.