Commonly asked questions on the legal issues relating to tribunal claims, settlement and compromise
Employment tribunals deal with claims brought against employers by employees, typically relating to unfair and wrongful dismissals, discrimination, equal pay, and deductions from wages. Employees must contact Acas at the outset to try to resolve the dispute through early conciliation.
This factsheet examines the steps employees must take to start a claim and what the employer needs to do to respond. It looks at the main facets of the formal tribunal hearing, including the types of hearing, preparation needed, procedures at the hearing and possible outcomes. The factsheet concludes by looking at the alternative of settling claims through conciliation or mediation, and describes the key features of settlement agreements.
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When employment tribunals were first set up, they were intended to be a speedy, informal and inexpensive way of resolving disputes between an employer and employee. This isn’t how they’ve turned out in practice. Employment law is increasingly complex, leading to a lengthy, costly and legalistic process with both claimant and respondent (the employer) typically having legal representation at hearings.
We welcome the Supreme Court’s ruling in July 2017 that the UK’s fee system for individuals enforcing their employment rights was unlawful. The staggering drop of over 70% in the number of claims since fees were introduced in July 2014 suggests that fees have affected access to justice. It’s inevitable that some perfectly valid claims were discouraged as a result.
Our research into conflict management in workplaces consistently underlines the costs to employers of responding to claims, particularly in management time. We therefore continue to encourage the use of alternative dispute resolution, particularly mediation, as a means of resolving disputes at an early, informal stage and welcome the greater role of Acas in providing early conciliation.
What is an employment tribunal?
UK employment tribunals deal with claims that may be brought against employers by employees relating to their employment or its termination. In Northern Ireland they are called industrial tribunals.
The employment relationship is governed both by the law of contract and by statute law. Some contractual disputes can be dealt with either by the tribunal or by ordinary civil courts (for example the High or County Court). The majority of an individual’s statutory rights can currently only be enforced by employment tribunals.
Examples of the types of dispute heard by employment tribunals are:
- unfair dismissal
- wrongful dismissal
- discrimination (race, sex, disability, religion or belief; sexual orientation, age, maternity or paternity leave/pay)
- equal pay
- deductions from wages.
Examples of employment disputes heard by the 'ordinary' civil court system include:
- accidents at work
- restrictive covenants
- contractual breaches relating to non-payment of wages and benefits owing, or pay in lieu of notice
- wrongful dismissal claims and other contractual claims for damages arising out of termination of employment.
In Northern Ireland, there's also a separate tribunal, the 'Fair Employment Tribunal', specifically to deal with religious discrimination and political belief claims – the work of this tribunal is outside the scope of this factsheet, but see Useful contacts for more information.
Depending upon the type and complexity of claim, an employment tribunal may consist of an Employment Judge, who is legally-qualified, sitting alone or sitting as part of a panel which includes lay members (more typical in the case of discrimination claims).
Employment tribunal reforms
In July 2017, the Supreme Court unanimously allowed Unison’s appeal that the UK’s fee system for individuals enforcing their employment rights via employment tribunals was unlawful. Government statistics show that from July to September 2017 – the period after the fee regime was abolished - the number of single employment tribunal claims has risen by 64%.
In October 2017 the Government announced plans to begin refunding tribunal fees and following a pilot scheme all individuals and organisations can now apply online for reimbursement of fees. Employers are able to claim if they had paid the tribunal fee to the claimant as part of an award, or under a settlement agreement.
A more proportionate fee system may reappear in the future. There have been previous government reviews on the impact of tribunal fees and a long term review of the entire civil courts structure in England and Wales. The recommendations and possible reforms include a compulsory user-friendly online system for civil claims worth under £25,000 designed to be used with minimum legal assistance. A government response to a further consultation on reforming the employment tribunal system proposed a more online claims process and delegating routine work to case workers. There are also plans to make new employment tribunal decisions from England, Wales and Scotland available online.
Starting and responding to a claim
To start a claim, an employee (known as the 'claimant') must take the following steps:
Check that they are within the strict time limits for bringing a claim, although in certain circumstances a time extension may be granted.
Check that they have followed the employer's own dispute resolution procedures.
Check the Acas Code of Practice on discipline and grievance and procedures has been followed as both the employee and employers have responsibility to adhere to this.
If the claim refers to a dismissal, ensure that they have exercised the right of appeal in accordance with their employer’s internal procedures.
Consider any other available forms of dispute resolution (for example, mediation).
Contact Acas for ‘early conciliation’ if still considering a claim - to try and resolve the dispute quickly and cost-effectively as an alternative to proceeding to a tribunal. Acas’ ‘Facing a dispute at work’ flowchart shows the process.
Spend up to one month, with a possible two-week extension, pursuing conciliation through Acas, which may lead to a ‘conciliation certificate’ showing that it’s not been possible to achieve a settlement.
After these steps and if the employee wishes to pursue a claim, they can complete a claim form (Form ET1) and submit it to the employment tribunal.
Upon receipt of the claim form, the employment tribunal:
- logs the claim
- sends a copy to Acas
- sends a copy to the employer (known as the 'respondent'), together with a form for the employer to respond to the claim (Form ET3).
The respondent then has 28 days to complete and return the response form to the tribunal. It’s very important to deal with the response form as a priority, taking legal advice if necessary. If the response form is not returned in time, a default judgment may be entered and the respondent will not be permitted to defend the claim. Although the respondent can apply to the tribunal for a time extension, there’s no guarantee this will be granted.
The employer should set out the main points of its argument in the response. Holding back important information with the intention of surprising the claimant at the hearing is not a good strategy because the tribunal could penalise the employer by imposing costs or rule that the information is inadmissible.
The next stages may include a preliminary hearing to explore the matter further or listing the case for the final full hearing. The tribunal offices send out instructions setting out the case preparation steps (such as disclosure of documents and witness statements) to make sure things happen properly and punctually - this is known as giving ‘directions’. Directions contain all relevant deadlines including the hearing date.
CIPD surveys of conflict management have underlined the costs to employers of responding to claims, particularly in management time. Our most recent report Conflict management - a shift in direction? found that, on average, employers spend 19 days in management time dealing with an employment tribunal case.
In general, the time limit for submission of tribunal claims is within three months of the date of termination of employment, or the act (for example, harassment) complained of by the claimant. Certain claims, such as those relating to a redundancy payment, have a six-month time limit. An additional one month is allowed for Acas conciliation (plus a further 14 days in some circumstances). The conciliation period temporarily stops the normal three- or six-month clock for lodging a tribunal claim until conciliation has been completed.
The tribunal hearing
All matters that are accepted by the tribunal, but are not settled or withdrawn, are brought before the tribunal at a formal hearing.
Types of hearing
There are two main types of hearing:
Preliminary hearing: a short hearing to address any issues so that the case can proceed smoothly before a full hearing. For example, there may be a disagreement over whether or not the claimant was an employee and hence whether or not they were entitled to bring the claim.
Full hearing this is the full hearing of the case.
In preparation for a full hearing, both the claimant and the respondent (known as the ‘parties’) will need to:
Exchange lists of all documents relevant to the claim (for example, contract of employment, letters, emails, notes of meetings and any other paper or computer generated records even if these help the other party’s case). These documents will need to be agreed by both sides, and will be presented in one ‘bundle’ for the hearing. It’s usual for the respondent to offer to collate the bundle. All pages in the bundle must be numbered, with a contents page at the start.
Prepare witness statements from all witnesses who will give evidence at the hearing. The witness statements must be written in numbered paragraphs and will often refer to documents that have been disclosed.
In the ‘directions’, the tribunal will have given a date by which lists of documents and the witness statements should be exchanged.
Many claimants and respondents have legal representatives, but there’s no requirement to do so.
It’s important to ensure that all parties and witnesses attend the tribunal on time. All participants must register with the Duty Clerk before going to the waiting room.
At the hearing, the Employment Judge usually sets out the key issues and checks whether there are any preliminary issues. In most cases, the previously submitted witness statements are ’taken as read’ which means that they are the witnesses’ chief evidence unless the tribunal says otherwise. In some cases, the judge may ask the witness read their statement out or clarify some crucial passages. Each witness takes an oath before reading their statement or being asked questions by the ‘other side’ and then by their ‘own side’. The judge may also ask questions.
Once all witnesses for one party have given evidence, then the other side’s witnesses have their turn. At the end, the representatives of both sides will ‘sum up’ their case, and the tribunal will adjourn or, in some cases, give its decision immediately.
Tribunals try to limit oral evidence and submissions to minimise the time spent at hearings, and judges have the flexibility to manage proceedings as they see fit.
Depending on the time available, the decision (called a ‘judgment’) is not always given on the day of the hearing.
If the tribunal reaches a decision in favour of the claimant, depending on the type of claim, the tribunal can award:
- reinstatement (the employee gets their job back)
- re-engagement (the employee returns to the organisation in a new role)
- payment of wages or monies due to the employee.
Reinstatement and re-engagement are very rare.
Settlement of claims
An employer and employee may wish to settle an employment dispute without going through a full hearing either:
- between themselves directly
- by using the conciliation service offered by Acas, or
- by using an internal or external mediator. Our guide Mediation: an approach to resolving workplace issues, produced jointly with Acas, provides practical help to enable organisations to decide if mediation could work for them.
Settlement will lead to an agreement 'compromising' the claim through:
- a settlement agreement (previously called a ‘compromise agreement’), or
- an agreement achieved through Acas conciliation (a 'COT3').
Settlement agreements have the following key features:
- They can only settle the particular complaint or claims that have been raised in that case, for example unfair dismissal, race discrimination.
- They must be in writing.
- The employee must take legal advice on the contents of the agreement from a solicitor or qualified independent adviser with appropriate insurance cover.
- The adviser must certify in writing that advice has been taken by the employee.
- Appropriate compensation must be negotiated with the employee.
Settlement agreements are attractive to employers and employees as they can terminate a dispute or employment without time-consuming stressful procedures, and perhaps use a confidentiality clause to keep the dispute private. However sometimes former employees challenge the validity of settlement agreements, and employers must ensure that each agreement is carefully drafted. Acas has issued a statutory Code of Practice and non-statutory guidance on settlement agreements.
Acas and COT3 agreements
As previously stated, Acas must conciliate in most claims brought in employment tribunals. The main advantages of the COT3 form of settlement drawn up by Acas are:
- It's free of charge.
- It can easily settle all claims between the parties, including ruling out future claims.
- Legal advice is not compulsory.
Useful contacts and further reading
Judicial Appointments Commission The Commission is responsible for recruitment of lay members to employment tribunals. Their advice to CIPD members who are interested in applying to act as a lay member is to keep an eye on their website.
Books and reports
BROOKS, T. (2014) Fairer fees: fixing the employment tribunal system. London: Citizens Advice Bureau.
INCOMES DATA SERVICES. (2014) Employment tribunal practice and procedure. Employment law handbook. London: IDS.
BURT, E. (2017) Four types of tribunal claim that will soar in the post-fee era. PM Daily. 15 August.
Early conciliation: an update. (2016) IDS Employment Law Brief HR. No 1043, April. pp11-19.
Thousands of workers being ‘priced out of justice’ by fees. (2017) Workplace Report. March. pp15-17.
CIPD members can use our online journals to find articles from over 300 journal titles relevant to HR.
Members and People Management subscribers can see articles on the People Management website.
This factsheet was last updated by Lisa Ayling, solicitor and employment law specialist, and by Rachel Suff.