As an employer, there are a myriad of ways to resolve an employment dispute.
The tribunal is the most obvious one, but a disagreement can also be settled through arbitration, conciliation and settlement.
In this article, Employment Associate Chris Dobbs outlines how arbitration and conciliation works through ACAS, and discusses your settlement agreement options.
This article is a summary of Chris’ latest webinar. You can watch the webinar back below, or read on for the written summary…
Quick Links
- ACAS and ACAS Claims
- Conciliation: What is it and what are the benefits?
- What is 'without prejudice'
- What is a protected conversation?
- Settlement Agreements
What is ACAS?
ACAS is a government-funded body that stands for ‘The Advisory, Conciliation and Arbitration Service’.
Its aim is to resolve any employment disputes before they make their way to the courts.
They have a variety of services which include, training, early conciliation, collective conciliation (group claims) and arbitration.
How do ACAS claims work?
A claimant must notify ACAS of the existence/potential existence of a claim before they can issue a tribunal claim. ACAS will then issue the claimant with a certificate either immediately or at the end of a failed conciliation process.
If the claimant does not inform ACAS, or they don’t have the certificate, the tribunal may not have the jurisdiction to hear the claim.
What is conciliation?
Conciliation involves ACAS speaking to both you and your employee to try and reach an agreement without court involvement.
Early conciliation takes place before a claim is brought to tribunal; other forms of dispute resolution may take place during proceedings.
Both employers and employees can request early conciliation, but there is no requirement for either party to get involved. The rules are sightly different if an employer notifies, and it is much more common for the employee to do so.
As employer, you might also consider requesting conciliation if a resolution has already been reached in principle but is yet to be formalised in a contract.
Related: How to conduct Disciplinary Procedures - Advice for Employers
How long is the ACAS conciliation period?
The conciliation period lasts up to 6 weeks, but can be stopped by either party, at any time, if they believe that a resolution cannot be found. The period cannot be extended past the 6-week point.
When early conciliation is taking place, the standard limitation period for using a claim is paused and resumes after the 6-week period is up. However, if the six weeks runs past the end of the limitation period, there is always an additional one month from when the conciliation form can be granted.
Knowing the timeframes is important as a claim can be defeated if a claimant gets these wrong.
What are the benefits of ACAS early conciliation?
The biggest benefit of early conciliation is that discussions are held with an independent third party, not between disputing parties, and are confidential, so cannot be used later in proceedings.
In addition, it is possible to agree an outcome through conciliation which the tribunal cannot order, for example receiving a reference from the employer.
What does a conciliator do in ACAS?
Despite many conciliators having some legal training, they are not legal advisors, so cannot give legal advice. Instead, their job is to bring both the parties to an agreed resolution within the 6-week period.
Although conciliators must not take the side of either party, it can sometimes feel like they are on the claimant’s side. However, they are only putting forward the claimant’s position and are completely independent of the dispute and the tribunal.
What is a COT3 agreement?
ACAS will write up a COT3 agreement, a short version of a settlement agreement, for both parties. This will include payment figures, references, legal fees (if decided) and will be confidential.
As a quirk, the settlement strictly speaking becomes legally binding when both parties agree to the outcome, not when the COT3 is actually signed.
Related: How to write strong employment contracts
What is ‘without prejudice’ in disciplinary proceedings?
‘Protected conversations’ and ‘without prejudice’ are two phrases that are often used interchangeably. They both refer to an attempt made to resolve a dispute “off the record”. For employment disputes, this may involve engaging a HR consultant or a Solicitor to conduct such discussions on your behalf.
Without prejudice is a broader legal principle where two parties involved in an ongoing dispute, or where a claim has been presented, can engage in a genuine effort to resolve said dispute off the record.
Both parties must agree give informed consent, the effort to settle must be genuine, and the discussion should focus on the merits and efforts to resolve the dispute.
However, discussions held without prejudice cannot be used to hide improper behaviour such as undue pressure or blackmail. Doing so may even render the discussions or correspondence admissible.
What if the claimant accepts an offer at tribunal, but not during without prejudice?
There is always scope to apply for costs in the Tribunal and they can be awarded where a party has acted “unreasonably”.
In other jurisdictions, such as contract disputes in the High Court, refusing a reasonable settlement offer can be seen as “unreasonable”.
In the Tribunal, however, the claimant rejecting a reasonable settlement offer is not necessarily sufficient to get a costs order in and of itself. Therefore a Claimant being less successful than an early offer you made them is not necessarily going to be liable for costs.
What is a protected conversation?
Protected conversations involve a settled exit or resolution where there isn’t a dispute or legal claim at the moment in which the conversation is held.
They can be used where a tribunal process hasn’t started, the employee hasn’t yet been terminated or perhaps during a disciplinary process where a potential claim is not yet contemplated by the parties.
These conversations are useful for enhanced redundancy offers, for example you may be offering a claimant 2 weeks’ pay rather than one for each year they’ve been employed but do not want this to be discussed openly.
Protected conversations cannot be used where the issue in question is discrimination as it only applies to claims under the Employment Rights Act. Logically this also makes sense as the claim of potential dispute has already arisen due to the discrimination having taken place or being alleged and therefore a without prejudice discussion is the more appropriate route.
Related: Redundancies - Key issues and your obligations as the employer
What is a settlement agreement?
Settlement agreements are heavily regulated documents intended to resolve a dispute without the need for litigation. They can often be drawn up following a protected conversation or without prejudice agreement being reached.
Settlement agreements must be in writing, relate to a specific potential claim and the employee must receive independent advice on the terms and effect of the signing of the agreement.
When is a settlement agreement used?
Settlement agreements are commonly used to resolve a variety of employment disputes including unfair dismissals, potential redundancies, and discrimination claims.
Related: Dismissals & Tribunal Claims - Everything Employers need to know
What are the advantages of a settlement agreement?
A settlement agreement can often be advantageous, as they can:
- Be used to offer enhanced redundancy packages to avoid a formal procedure or process,
- Be much more cost effective than a potential tribunal payout,
- Provide a degree of confidentiality where agreed (to a certain extent), and
- Allow the employer to negotiate terms of exit (reference).
What should a settlement agreement include?
Settlement agreements should include:
- Compensation details and how they are going to be paid to the claimant,
- The tax status of various proposals,
- The Income Tax and Pensions Act allows for a payment which is genuinely compensatory, up to £30,000 without deduction of tax and national insurance contributions.
- But be mindful that the final arbiter of taxable payments is HMRC
- The confidentiality and non-disclosure of the agreement.
- Although there are limitations to consider with this, such as, an employee cannot be prevented from whistleblowing or reporting a criminal offence.
Related: A guide to employment settlement agreements
Upcoming Events
This is the summary of our latest online webinar but, don’t worry if you missed it, there are still a few more to come over the next couple of months as we conclude our series on the employee lifecycle.
The next one is taking place on Wednesday 6th November, where my colleague Nathan Andrews will be talking you through facilitative mediation in workplace conflicts. Find out more here.
You can sign up to our free newsletter to receive invitations to upcoming webinars and events here.
You can also find recordings, slides and summaries of previous webinars here.
Employment & HR Solicitors
Our bright Employment Team has a vast experience in advising employers in cases of all kinds.
We’d be happy to provide tailored advice and assist you in resolving and mitigating workplace disputes.
You can call us on 01202 499255, or fill out the form at the top of this page, for a free initial appointment.
We also offer tailored courses for new and experienced employers and HR professionals alike, which may be useful to you. You can find out more here.
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