• The COVID-19 pandemic is having a severe negative impact on many businesses and also resulting in more employment tribunal claims being brought. This article explores whether employers should consider settling tribunal claims early.

    Current situation

    The tribunal service is struggling under the weight of claims and we are experiencing long delays. As a result of this, many employers are considering carefully whether it is possible to settle claims early.

    A recent Law Society Gazette article highlighted that multiple claims were up 82% on the same period in 2019. Our experiences are that considerable delays are being experienced as part of the Advisory, Conciliation and Arbitration Service (Acas) pre-claim conciliation process, in employers being notified of claims and in claims progressing through the tribunal system.

    Delays in the system, the increased complexity of claims, the current move to largely remote hearings and greater movement of employees are all causing employers to consider whether settlement might be a sensible option.

    In a number of claims we are aware of, key personnel have moved employer before a final hearing has been scheduled. Although an employee who has left may still be willing to give evidence on behalf of a former employer, this is not always the case. Although orders can be obtained to compel individuals to attend tribunal this is not always ideal.

    Employees may also be more willing to consider settlement as an option, rather than face waiting a year or more for their claim to reach a final hearing stage.

    Early conciliation

    Acas recently published data from 2019-2020 which recorded that 17% of early conciliation notifications resulted in a conciliated settlement between the parties.

    If, as an employer, you chooses to settle during the Acas early conciliation period, as opposed to later on, it is likely they will save greatly on costs associated with the preparation of a tribunal hearing as well as management time. Therefore, during this initial stage, we recommend that settlement should be seriously considered.

    Prior to 1 December 2020 the standard Acas early conciliation period was four weeks. However, for notifications received on or after 1 December 2020 this has now been extended to six weeks with no further opportunity to extend. This change allows parties more time to settle at an early stage.

    Case study

    It is, however, possible to settle a claim at any time up to and including the final hearing. We recently settled a claim for an employer where the parties had not taken the opportunity to engage during early conciliation and a claim had been brought.

    The employer accepted sums were owing to the worker and therefore we managed to settle before costs and time needed to be incurred in collating papers and drafting a response.

    COT3 agreement

    If parties agree to settle through Acas, a COT3 agreement sets out the terms upon which the parties are agreeing to settle. The COT3 can include clauses to protect your organisation such as a non-derogatory comments clause and confidentiality clauses to safeguard your reputation as an employer.

    It is important to note that a judgment at the end of the tribunal does not necessarily afford you the same luxury.

    The agreement can introduce post-termination restrictions. For example, preventing the former employee from dealing with or soliciting clients for an agreed period and protecting your confidential information.

    The COT3 can also be drafted to settle not only the current claim but any future claims an employee might have against you, providing certainty that a former employee will not raise another issue save for certain excluded circumstances. We would recommend seeking advice on the terms of such an agreement to ensure your company is adequately protected.

    Ultimately businesses will have to decide during this uncertain time whether to continue to litigate a claim or whether to consider settlement. This would take into account both commercial arguments and the strength of the parties’ positions, which can change as a claim progresses.

    For those parties that do not reach a settlement, there are other alternatives to lengthy litigation. These include looking at judicial mediation, where a judge mediates between the parties to reach a resolution. We expect to see more use of this going forward.

    Book a free online consultation

    If you would like more information on how we can support you with employment tribunals, book a 30 minute online appointment with a lawyer from our Employment team for an initial discussion on your needs and how we can help.

    This content is correct at time of publication

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