It is sensible in most employment disputes for both the employer and employee to consider and discuss the prospect of a settlement of their disputes once proceedings are either threatened or commenced but certainly before such a matter comes to a hearing. The Advisory, Conciliation and Arbitration Service (ACAS) play a significant role in the resolution of Employment Tribunal cases and other employment disputes. However, whether or not ACAS is used, the parties should conduct their own discussions either directly or through professional advisors who will assist in arriving at an agreed settlement. However, if an agreement is reached through ACAS, the ACAS officer will prepare a written agreement for the parties
All such settlement should be properly documented in what is known as a compromise agreement or other similar settlement agreement. All such agreements should clearly be in writing and may be in the form of:
- A formal compromise agreement which satisfies the various statutory requirements
- A less formal settlement agreement which may be satisfactory if the time limit for any further statutory claims by the employer has passed
- A combination of compromise and settlement agreement
- An order made by the court or tribunal to record the terms of the settlement between the parties
Compromise agreements must be tailored to the individual circumstances of each case. For the agreement to be legally binding, the employee must receive advice from a ‘relevant independent advisor’. The advice should relate to the terms and effect of the agreement and, in particular, to any affect on the employee’s ability to pursue his or her rights before an employment tribunal. A relevant independent can be:
- A qualified lawyer
- An officer, official, employee or member of an independent trade union, who is certified by the trade union as competent to give advice
- A person who works at an advice centre
- A qualified legal executive employed by a solicitor’s practice and who is supervised by a solicitor who holds a practising certificate.
In addition, the parties do have an option to request that arbitration services are applied to their dispute. Arbitration differs from conciliation in that the arbitrator decides how the dispute should be resolved rather than the parties themselves. This type of option should clearly be used with caution given the inevitable consequence that one or both of the parties will potentially be unhappy with the outcome decided upon by the arbitrator.