PLEASE NOTE: Information in this article is correct at the time of publication, please contact DFA Law for current advice on older articles.
There are a number of ways in which the parties can attempt to resolve an employment dispute and reach a settlement, either before or after it becomes the subject of an Employment Tribunal claim:
- They may negotiate directly and enter into a settlement agreement.
- They may attempt mediation with the assistance of a trained and neutral mediator.
- Where proceedings have been issued, the Employment Tribunal may offer the parties the opportunity to attempt judicial mediation by an employment judge.
Another option is for the parties to be assisted by Acas to reach a settlement. This article considers arrangements for Acas conciliation.
Benefits of Acas conciliation
Some employers believe that during conciliation the Acas conciliator is there to be on the side of the employee, or even that the conciliator is actively advising the employee. However this is not the case and the role of the conciliator is an entirely neutral one.
The benefits of entering into Acas conciliation are especially acute when one of the parties is not legally represented and include:
- Simplicity – Acas offers a simple means of settling a claim and it avoids the need for the employee to be advised by a legal professional as required by a settlement agreement that is entered into without the assistance of Acas.
- Neutrality – In a case where feelings may be running high and a firm stance is taken between the parties and their representatives, a neutral conciliator can help break a deadlock.
- Speed – Once Acas advises a tribunal that a settlement has been reached, the tribunal will immediately take it out of the hearing list.
- Cost – There is no charge for the services of an Acas conciliation officer.
- Confidentiality – Anything communicated to a conciliation officer in connection with the performance of their functions is not admissible in evidence in tribunal proceedings unless the person who communicated it to the officer gives their consent.
- Effectiveness – 56% of EC notifications received in the period January to December 2017 did not progress to a tribunal claim. Conciliation remains available up to the day of the case being heard by the employment tribunal. In the period April 2017 to March 2018, 30% of claims issued after EC were settled by Acas before reaching tribunal hearing.
When a settlement is reached through Acas
Section 203 of the Employment Rights Act 1996 which, in general, prevents employees from contracting out of their legal rights (such as the right to bring Employment Tribunal claims), states that a settlement agreement will be effective where a conciliator has “taken action”.
A written settlement agreement reached via ACAS is known as a COT3, named after the form in which the conciliator sets out the agreed terms. The COT3 is sent out to the parties by the conciliator and is then signed by the parties (or their representatives).
However, it is important to note that a settlement achieved via ACAS can be legally binding even if the COT3 form is not used. In fact a written agreement is not necessary at all for the settlement to be valid and binding.
Verbal agreement is legally binding once terms agreed
Once the parties (or their representatives) have both spoken to the conciliator and confirmed their agreement to the full terms of the COT3, a binding agreement will have been reached through Acas.
Neither party can then change their mind about the agreement. An agreement concluded with the help of an Acas conciliator effectively prevents an Employment Tribunal from hearing the claim.
Where Employment Tribunal proceedings have already been issued, Acas will then notify the tribunal that the claim has been settled through conciliation and the tribunal clerk will remove any scheduled hearing from the tribunal’s list.
The conciliator must send the COT3 agreement to the parties for signing and dating. A covering letter will explain to each party what they have to do once they have completed the copies of the COT3 sent to them.
If, in between reaching the agreement and receiving the forms for signing, one party tries to back out of the agreement and refuses to sign the forms, the other party may hold them to the agreement rather than treating the agreement as discharged and allowing the hearing to proceed.
In these circumstances the tribunal will list a preliminary hearing to decide whether or not an agreement was reached between the parties, with the assistance of the conciliator.
The COT3 form
The parties must consider the terms of the agreement that they want to reach through Acas and record in the COT3 form. These might include:
- Whether one party will pay the other a sum of money and the timescales for that payment.
- What claims / proceedings are to be settled by the agreement.
- Requirements for confidentiality or promises not to make derogatory statements.
- Full and final settlements
- From an employer’s point of view it is very important to seek legal advice on the wording of a COT3 agreement.
Unless the agreement is very clear it will only settle the proceedings specified in the agreement. Any general wording (such as “in full and final settlement of all claims which the applicant may have against the respondent arising from his employment or its termination”) will be deemed to be limited to those claims that are within the contemplation of the parties at the time. Therefore, in order to exclude the risk of future claims, there should be a specific reference to any possible future claims.
Without careful drafting there is a risk that the employee could bring new claims at a future date.
Conciliators are usually very reluctant to agree a COT3 which seek to exclude liability in respect of personal injury and accrued pension rights. In fact, under the Employment Tribunals Act 1996 conciliators do not have power to conciliate in claims for personal injury and the Pensions Act 1995 limits the extent to which claims for accrued pension rights can be waived.
However, as long as both parties are happy to waive claims for personal injury and accrued pension rights, they can be included in the COT3 subject to the following:
Claims for future personal injury cannot be excluded as this would fall foul of the Unfair Contract Terms Act 1977.
Claims for accrued pension rights can only be excluded to the limited extent permitted by section 91Pensions Act 1995.
If you have an employment law query, please contact Michael Nadin on 01604 609560 or e-mail firstname.lastname@example.org