When a company receives a tribunal claim, it must decide whether to defend the claim or explore the possibility of settling it. In order to be legally binding on the claimant, a settlement needs to meet certain conditions, as explained below (acas involvement ), (compromise agreement ).
The advisability of seeking a settlement depends on several factors, including:
- the strength of the claimant's claim;
- the potential monetary value of the claim compared with the cost of the management time and expenses likely to be involved in defending it;
- the employment relations repercussions of defending or not defending the claim; and
- the potential adverse publicity for the company if the claim continues to a hearing.
Because of the legal technicalities involved in drafting an agreement to settle a claim, companies are strongly advised to contact their Association for advice on this. It may be advisable, for example, to make it a condition of the settlement that its terms will remain confidential. If the claimant wants the company to provide a reference, the terms of the reference may also need to be negotiated.
When the tribunal office accepts a claim, it sends a copy to the Advisory, Conciliation and Arbitration Service (ACAS). ACAS then appoints a conciliation officer to the case, whose job is to contact the claimant and the respondent to explore whether there is any possibility of the claim being settled. Discussions with an ACAS officer are confidential, and cannot be referred to in any subsequent tribunal hearing. If a settlement is reached through ACAS involvement, the claimant will be barred from pursuing the claim in the tribunal. An ACAS settlement is usually recorded on a standard form, known as a COT3.
The claim will not be heard by the tribunal until the period of conciliation by ACAS has ended. The amount of time for which ACAS will conciliate depends upon the nature of the claim. Where the claim relates to a breach of contract, failure to pay a redundancy payment or an unlawful deduction from pay, the conciliation period is seven weeks. For most other types of claim, such as unfair dismissal, the conciliation period is 13 weeks, although this can be extended by two weeks if the parties agree and ACAS confirms that a settlement appears to be imminent. In claims relating to discrimination or protected disclosure (protection for whistleblowers), however, there is no fixed conciliation period, and ACAS will continue to conciliate for as long as a settlement seems possible.
The other possible channel for reaching a legally binding settlement of a tribunal claim is through a compromise agreement. A compromise agreement can be reached without ACAS involvement, but it must meet certain stringent conditions. The agreement must be in writing and relate to the particular claim being made. Before signing the agreement the claimant must have received independent advice on its terms and effect, including the fact that signing it removes the right to go to a tribunal. The adviser may be:
- a qualified lawyer;
- a union official, employee or member whom the union has certified as competent and authorised to give advice;
- an advice centre worker whom the centre has certified as competent and authorised to give advice; or
- a legal executive employed by a firm of solicitors, provided the executive is supervised by a solicitor.
The adviser must be covered by insurance or a professional indeminity against the risk of providing negligent advice and must be named in the agreement. The agreement must also state that it meets the conditions regulating compromise agreements.
It is possible to reach a legally binding settlement of a breach of contract claim without ACAS involvement and without meeting the conditions for a compromise agreement.