Settling a claim





Claimants can reach legally binding settlements of employment disputes in which they agree to give up their claim(s) in return for binding promises by the employer, recorded in a settlement agreement. A settlement can be reached through Acas conciliation (called a COT3 agreement) or through a settlement agreement with the employer signed after receiving advice from a relevant independent advisor. Settlement agreements usually involve the employer paying a sum of money in return for the worker giving up rights but non-monetary issues can be settled too, such as a reference or the return of property. It is important to take advice to ensure any offer adequately reflects the value of the claim.




In general, employees and workers cannot waive, settle or give away their statutory employment rights except through a valid settlement agreement or Acas COT 3 agreement. Any attempt to do so is void. This policy position is intended to reflect the imbalance of negotiating power in the employment relationship. 






To be valid, a settlement agreement must take a particular form. Specifically, it must:



• be in writing; 





• relate to a particular complaint; and





• the worker must have received advice from a relevant independent adviser on the terms and effect of the agreement and its effect on their ability to pursue an employment tribunal claim. 





A “relevant independent adviser” includes a solicitor with a practising certificate, a certified union official and a certified advice worker. If an advice centre worker provides the advice, he or she must receive no payment. 





A valid settlement agreement will bar the worker from bringing or continuing any of the claims identified in it. It can cover present and future claims that are, or could have been, contemplated at the time of the agreement (Byrnell v BT EAT/0383/04). The agreement must clearly identify all particular claims being compromised. In Hinton v University of East London [2005] IRLR 552, an agreement that referred to “all claims” did not validly compromise all potential claims the employee might have. To prevent other claims being brought, the wording of the agreement must be very specific and clear (DWP v Brindley [2016] UKEAT/0123/16/JOJ).




If a representative enters into an agreement on an individual’s behalf, that individual must have given them authority to do so. In Gloystarne & Co Ltd v Martin [2001] IRLR 15, a claimant was not bound by a settlement agreement made by a union official through Acas because he had not given his consent. 


A valid settlement agreement, once agreed, cannot be undone (Gibb v Maidstone & Tunbridge Wells NHS Trust [2010] EWCA Civ.678).





Settlement agreements often include promises to keep the terms confidential, especially the settlement sum, only disclosing it to immediate family. A claimant who breaks this kind of term risks losing the whole amount (Imam-Sadeque v Bluebay Asset Management (Services) Limited [2012] EWHC 3511).





Settlement agreements must not be used to silence whistleblowers. Any term in a settlement agreement that attempts to prevent a protected disclosure is void and has no effect (section 43J, ERA 96) (see Chapter 13).