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Mediation and Settlement

Reaching a middle ground to resolve disputes.

After a claim has been issued, parties are encouraged to attempt to settle claims before the case reaches a full hearing. Settlements can result in a satisfactory resolution for both parties which saves costs and can bring a swifter conclusion than engaging in lengthy Employment Tribunal proceedings.

Settlement can be achieved in a number of ways, whether directly between the parties, through the ACAS Conciliation service, or through a mediation. Each process has its pros and cons and the best method of negotiation will be depending on the nature and content of the dispute. We are highly experienced in negotiating settlements on behalf of claimants and respondents through the various methods of negotiation.

ACAS conciliation

Not only is the ACAS early conciliation process a requirement before filing most claims (please see our Pre-Claim Conciliation Process – ACAS page for more information) but it also continues to be available to parties after a claim is issued to attempt to facilitate a settlement. It can be a useful service, particularly, where one or both parties are not represented by a legal adviser or trade union.

As with the Early Conciliation period, the service is independent, free to use and its sole role is to assist parties in reaching an agreement. Any correspondence between ACAS and the parties will not form part of the evidence before the Employment Tribunal.

If an agreement is reached through the ACAS service, any oral agreement between the parties is binding and the terms are recorded in an agreement called a COT3 agreement. The agreement often provides that the respondent will pay to the claimant a sum of money in exchange for the claimant agreeing to accept the same in full and final settlement of their claim. COT3 agreements must usually be specific in relation to the claims that are being waived by the claimant. They cannot be used to resolve wider areas of dispute. This differs from a settlement agreement which pursuant to which the parties will also waive any future employment claim against the employer.

Key features:

  • Settlement reached through ACAS is binding when an oral agreement is reached.
  • The claims that the settlement is seeking to waive should be adequately particularised and narrow.

Settlement Agreement

In many circumstances, particularly where both parties to proceedings are represented or there are wider issues to consider, such as other claims, agreements in relation to non-competition or confidentiality agreements, it may be appropriate to reach a settlement between them and enter into a settlement agreement to reflect the terms reached. The claimant will need to obtain independent legal advice as to the terms and effect of the settlement agreement – it is useful to note that this is not a requirement for a COT3 agreement reached through ACAS, however the ACAS conciliator should explain the effect of the terms.

Settlement agreements are usually significantly longer than COT3 agreements and often provide that the claimant will waive their right to bring a further employment claim against the employer in the future. There are also often more detailed provisions in respect of confidentiality, and it is also possible to agree a reference or joint statement as to the reasons for the employees departure which can be appended to the agreement.

Settlement agreements are also often used where ACAS has not been involved in settlement negotiations.

Key features:

  • There is a requirement for the claimant to obtain legal advice on the settlement agreement.
  • A settlement agreement often waives the claimant’s right to bring a wide range of employment claims including future claims again their employer.
  • A settlement agreement of ten contains detailed provisions in relation to wider issues, such as stock options, references and future acts.

Mediation

An independent mediator acts as an information-gatherer in order to help the parties find common ground and reach a settlement. This can be particularly beneficial where matters are particularly contentious between the parties with each side being particularly fixed on their respective positions.

One benefit of mediation is that there is a wider range of outcomes that can be reached than can be ordered through the courts, such as an apology to the claimant.

If parties agree to use a mediator they usually seek to agree between them a suitable individual. Often this will be a qualified lawyer or barrister with experience in conducting mediations. On the day of the mediation the parties normally hold a joint meeting with the mediator to present their case. Following this each side will then go to separate rooms and the mediator will move between the rooms to attempt to reach common ground. The mediator will often seek to agree terms of a settlement agreement in order to bring a conclusion to the Employment Tribunal proceedings.

Key features:

  • Can assist in situations where parties have reached a deadlock in their positions.
  • The outcome is not binding and can provide a wider range of solutions.
  • The process can be costly as the mediator will need to be paid for their time.

Judicial mediation

The Employment Tribunal offers a mediation service which involves an Employment Judge mediating between the parties to reach a resolution to the claims. At the outset of the Employment Tribunal claim the parties will be asked if they are interested in judicial mediation, and the Employment Tribunal will consider if the case is suitable.

If the case is suitable, and the parties interested, the Tribunal will list a case management meeting.  This is similar to a case management preliminary hearing which takes place in order to set case management directions for the Employment Tribunal claim itself.

The case management meeting will deal with fixing a date for the mediation and informing the parties of any documents required for the mediation. Juridical mediations will take place at the Employment Tribunal. At the mediation both parties will appear separately before a Judge and each party will go into separate rooms with the Employment Judge moving between the rooms to facilitate settlement negotiations. If a settlement is reached this will either be done via ACAS and a COT3 agreement or the parties will agree a settlement agreement.

Key features:

  • There is no longer a fee for entering into judicial mediation.
  • The preparation for and nature of the judicial mediation is relatively similar, in that it is conducted at an Employment Tribunal by a Judge who is not a specialist mediator.

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