Settlement agreement when a tribunal claim has been started

Once a tribunal claim has been issued, settlement has to end the proceedings as well as the dispute: the claim must be withdrawn and dismissed, the settlement must cover the claims in the proceedings and the ones the employee could still bring, and the employer has to choose between a settlement agreement with independent advice and a settlement through Acas, which binds without it. The agreement also has to deal with costs, the record, and the timing, because the hearing date is the pressure on both sides. I draft the settlement for the employer for a fixed fee of £795, delivered in three working days, with a note on the conversation; a version including negotiation with the employee's adviser is £995.

Who this is for

Employers in England and Wales who have received an employment tribunal claim, or an Acas early conciliation notification, and want to settle it before the hearing.

What matters in settling an issued tribunal claim

Settling after the claim is issued and what changes

Once a claim has been issued the dispute is defined by the claim form and the response, the tribunal has a timetable with a hearing date, both sides have incurred or will incur costs, and the employee has usually taken advice; settlement is still possible at any stage (and most claims settle), but the agreement must now end the proceedings as well as the dispute, must cover the claims pleaded and those the employee could add, and should be reached through a channel that is without prejudice (direct negotiation, solicitors' correspondence, judicial mediation or Acas), because an offer made in open correspondence is before the tribunal.

The Acas route and the COT3 as the alternative to a settlement agreement

Where Acas is involved (which it is in every claim through early conciliation under section 18A of the Employment Tribunals Act 1996, and can be again after issue), the parties can settle through the conciliation officer on a COT3 form, which binds the employee without the independent advice a settlement agreement requires, is shorter, and is the usual route for a settlement of a pleaded claim; a settlement agreement under section 203 of the Employment Rights Act 1996 is used instead where the terms are more elaborate (covenants, a reference, shares, confidentiality), where the employer wants the adviser's certificate, or where Acas is not involved, and the note explains which suits the case.

The terms that end the proceedings and the withdrawal

The agreement should require the employee to withdraw the claim in writing to the tribunal within a stated period after the settlement payment or on signing (with the tribunal then dismissing the claim on withdrawal under its rules, so that it cannot be revived), should make the payment conditional on the withdrawal or on the dismissal, should say what happens to any hearing listed (the parties inform the tribunal that the claim has settled), and should deal with any counterclaim or related proceedings; a settlement that pays the employee before the claim is withdrawn relies on the employee's good faith, and the sequence should be the other way round.

Costs, judgments and the record

The agreement should say that each side bears its own costs (costs in the tribunal are rare in any event), should deal with any costs or deposit orders already made, should state whether any judgment on liability already given stands (a settlement after a liability judgment settles remedy only unless the judgment is set aside by consent, which the tribunal may not allow), and should address the public record (the claim and any judgments are on the public register, and the settlement does not remove them, though a settled claim ends with a dismissal on withdrawal rather than a finding); an employer that expects the settlement to erase the claim from the record should be told that it does not.

Timing, the hearing date and the pressure on both sides

The hearing date concentrates minds: the employee faces the prospect of giving evidence and the risk of losing, the employer faces management time, witness preparation, publicity and the risk of a finding, and most settlements happen in the weeks before the hearing; the employer's offer should be made early enough to save the preparation costs and late enough to reflect the strength of the case as the evidence emerges, the agreement should be ready to sign at short notice (the note sets out the sequence), and where judicial mediation is offered it should be considered, because a settlement reached with a judge in the room is one neither side reopens.

The settlement's scope, future claims and the related claims

The agreement should waive the claims in the proceedings and the claims the employee could bring arising from the employment and its termination, listed specifically in the manner section 203 of the Employment Rights Act 1996 and section 147 of the Equality Act 2010 prescribe (or on the COT3 in the form Acas accepts), should cover claims against individual respondents with their agreement, should contain the employee's warranty that no other claims have been issued, and should contain the usual terms (the compensation payment tax-free to the thirty thousand pound limit in section 403 of the Income Tax (Earnings and Pensions) Act 2003 the notice element taxed as earnings under section 402B, confidentiality within the limits of section 43J and the Employment Rights Act 2025 provisions voiding non-disclosure terms about harassment and discrimination, on the timetable the regulations set, the reference, the employer's contribution to the adviser's fees under section 413A); a settlement of the claim that leaves a related claim open is a settlement of half the dispute.

What it costs

Settlement agreement, £795. Drafted for your situation, with a note on how to have the conversation. Three working days.

Settlement agreement including reasonable negotiation with the employee's adviser, £995. The agreement in three working days. The negotiation then runs until the agreement is signed or it becomes clear it will not settle. Reasonable negotiation means what, in my experience, amounts to the standard back and forth on a settlement agreement. If the employee or their adviser is being unreasonable, for example by conducting themselves unprofessionally or requiring a substantial rewrite that needs material further legal advice to you, I will flag it and we will discuss how best to proceed, which may involve further fixed-fee work. That would be unusual.

Buying online forms the engagement on payment. The scope is what the settlement agreements for employers page describes, you accept the Terms of Service at checkout, and I email you within four working hours to get started. If you would rather ask something first, email me.

What you get

• A bespoke settlement agreement drafted for the exit you are dealing with
• Proper waiver of the relevant statutory claims, so the agreement does what you are paying for
• Advice on the tax treatment, including the £30,000 exemption and what falls outside it
• Confidentiality, non-derogatory statements and an agreed reference
• Reaffirmation or replacement of restrictive covenants, which is often the real value
• A short note on how to open the conversation and keep it without prejudice or protected
• One round of amendments after the employee's adviser responds

What is not included

• Advising the employee, which their own adviser must do independently for the agreement to be valid
• Tribunal representation if the matter does not settle
• Payroll processing of the settlement sums
• Handling the settlement payment, since I do not hold client money

Questions I am often asked

Do we need a settlement agreement if Acas is involved?

Not necessarily. A COT3 through Acas binds the employee without independent advice and is the usual route for a pleaded claim. A settlement agreement is used where the terms are more elaborate or Acas is not involved. The note explains which suits the case.

Does settling remove the claim from the public record?

It does not. The claim and any judgments remain on the register; a settled claim ends with a dismissal on withdrawal rather than a finding. The agreement should not promise more.

When should we make an offer?

Early enough to save preparation costs, late enough to reflect the evidence, and in a without prejudice channel. Most claims settle in the weeks before the hearing, and judicial mediation is worth considering where offered.

Related guidance and services

• Settlement agreements for employers, £795, the service this page describes
• Employment contracts and handbooks, £595
• Shareholders agreement, £995
• Settlement agreement when the employee will not sign
• Settlement agreement when the employee has raised discrimination

This page is general guidance for businesses in England and Wales, not advice on your own circumstances. Last reviewed: October 2026. Email geoffrey@caesar.co.uk.