Dispute resolution

Q Why do parties consider dispute settlements?

A Litigation can be a stressful experience for both parties involved. Although employment tribunals aim to have informal hearings, they use legal terminology and can be very daunting, particularly for an unrepresented claimant. Cross-examination is unpleasant, and it is often difficult for people to relive an unhappy period of their life.

Legal fees soon begin to mount up for both parties, and in some cases, there may also be the fear of negative publicity. The respondent employer will also be concerned about the amount of time that senior management need to spend on the case.

Settlement offers a way for the parties to put the matter behind them and bring legal costs to an end, while ensuring that the matter remains confidential.

Q Why might the parties prefer not to settle a dispute?

A Sometimes an individual simply wants their day in court, and the opportunity to air their grievances publicly, or, in the employer’s case, to clear its name. Some employers want their workforce to see that they will fight claims ‘all the way’ rather than settle, while in other cases, the parties will have tried and failed to settle the dispute.

Q When should settlement be considered?

A Settlement should be considered throughout the life of a dispute. As time goes on, new facts will come to light, and the relative strengths of each party’s case can be re-evaluated. While a claimant may initially feel upset about an issue, and keen to air it in public, they often see it in a different light as time goes on. They may prefer to put the issue behind them, rather than open up old wounds. Parties also become more open to settlement as they realise how much money, time and energy the litigation is consuming.

Most settlements take place near to the date of the trial. However, since 1 October 2004, Acas, which negotiates a significant proportion of employment settlements, has generally only been able to offer this service during the first seven or 13 weeks of the litigation. The Government imposed this restriction to encourage parties to settle their claims early on in a dispute. However, it is too early to tell whether this initiative has been successful.

Q How can settlement be facilitated?

A Settlements can either be negotiated through Acas, or, where the claimant has a representative, between the respondent or its representative and the claimant’s representative.

Q What is the role of Acas in dispute resolution?

A Acas is usually copied in to every claim form that is served on a respondent. Upon receipt of such a form, an Acas officer will contact each of the parties and attempt to broker a settlement. Any discussions that take place with the Acas conciliation officer are confidential, and cannot be referred to if the case ultimately ends up in the employment tribunal. In 2003-2004, Acas conciliated a settlement in 38 per cent of all employment tribunal claims.

Q What is a compromise clause?

A This is an agreement made between the employee and employer, and usually results in a sum of money being paid to the employee in consideration for either refraining from issuing proceedings, or withdrawing any proceedings that have already gone to an employment tribunal (see opposite).

Q Does a compromise agreement have to be in writing?

A Yes. For the compromise agreement to be binding on both parties, it must be in writing. Other requirements are that:



  • the employee must receive independent advice
  • the adviser must have a current contract of insurance or professional indemnity insurance
  • the agreement must identify the adviser
  • the agreement must state that these statutory conditions regulating compromise agreements have been satisfied.
  • Although it is not a requirement, it is usual for the employer to pay a contribution to the costs of the independent advice.


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