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 started) 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, but settlements can also cover non-monetary aspects of an employment dispute such as the text of a reference or the return of property. It is important to take advice to ensure the amount offered adequately reflects the value of your claim.


As a general rule, the law does not allow employees and workers to waive, settle or give away their statutory employment rights, except through a valid settlement/compromise agreement or Acas COT 3 agreement. Any attempt to do so will be void. This policy position is intended to reflect the in-built imbalance of negotiating power in the employment relationship. 




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 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, 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” did not validly compromise any claim the employee might have. To prevent a claimant bringing other claims, the language used in the COT 3 agreement must be clear and specific (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, the claimant 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 to keep its terms confidential, especially the settlement sum, only disclosing it to 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 attempts to prevent a protected disclosure (blowing the whistle) under the Public Interest Disclosure Act 1998 will not be valid (see page 138).