Settling a claim

Claimants can reach legally binding settlements of individual employment disputes in which they agree not to issue their tribunal claim (or to give up a tribunal claim if it has already been launched) 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. This type of settlement agreement used to be called a compromise agreement.

Settlement agreements usually involve the employer paying a sum of money in return for the worker giving up rights. However, settlements can also cover non-monetary aspects of an employment dispute such as the text of any reference or the return of property. It is important to take advice to ensure the amount offered adequately reflects the value of your claim.

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

• be in writing;

• relate to a particular complaint; and

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

A “relevant independent advisor” includes a solicitor with a practising certificate, a certified union official, and a certified advice worker. If an advice centre worker provides the advice, there must have been no payment.

As long as the agreement is valid it will bar the worker from bringing or continuing any of the claims identified in it. It can cover present and future claims if these are, or could have been, contemplated at the time of the agreement (Byrnell v BT EAT/0383/04).

An agreement must clearly identify the particular claims being compromised. In Hinton v University of East London [2005] IRLR 552, an agreement that referred to “all claims” was not valid to compromise any claim the employee might have.

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, Mr Martin was not bound by a settlement agreement made by a union official through Acas because he had not given his consent. Once the appropriate authority has been given, it is virtually impossible to unravel a compromise agreement (Gibb v Maidstone & Tunbridge Wells NHS Trust [2010] EWCA Civ.678).

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

Any term in a settlement agreement that purports to prevent a worker making a protected disclosure (blowing the whistle) under the Public Interest Disclosure Act 1998 is void and has no effect (see page 303).