Alternatives to a tribunal

Even if Early Conciliation does not work, not all disputed workplace relationships finish in a tribunal hearing.

Settlement agreements

In July 2013 the government introduced settlement agreements as a way of providing a ‘consensual and mutually beneficial way of ending the employment relationship’. Based on the former compromise agreements, a settlement agreement is a legally binding contract which can be used to end an employment relationship on agreed terms. Settlement agreements can also be used to resolve an ongoing workplace dispute. These agreements can be proposed by either an employer or an employee.

Once a valid settlement agreement has been signed, the employee will be unable to make an employment tribunal claim about any type of claim which is listed on the agreement.

Where the employer and employee are unable to reach an agreement, the settlement discussions cannot usually be referred to as evidence in any subsequent unfair dismissal claim. Where the settlement discussions are held to resolve an existing dispute between the parties they cannot be used as evidence in any type of claim.

To be legally binding a settlement agreement must:

• be in writing

• relate to a particular complaint or proceedings

• the employee must have received advice from a relevant independent advisor such as a lawyer or a trade union representative

• the advisor must be named in the agreement and must hold indemnity insurance that covers them in the event of a claim relating to a loss arising from their advice

• the agreement must state that the statutory conditions relating to settlement agreements have been met.

Employees must be given time to consider the conditions of the agreement. Acas suggests a minimum ten calendar days unless both parties agree otherwise. Acas has produced a statutory Code of Practice, non-statutory guidance, a model agreement and letter templates, all are available at:


Another alternative to a tribunal is the Acas Arbitration Scheme, which was introduced in England and Wales in May 2001. Initially this was to be for unfair dismissal dispute resolution only – where an applicant would have a claim for unfair dismissal before an employment tribunal. The scheme now extends to disputes about flexible working and has been extended to Scotland.

The arbitration scheme is designed to be speedy and less costly than employment tribunal hearings. For the service to operate, both the ex-worker and the employer must agree – but they can only do so voluntarily. Both parties have to sign an arbitration agreement. This means they give up certain rights, such as the right to cross-examine and the right to have the hearing held in public. Once an agreement ! is reached neither side can go to an employment tribunal and there are very few rights to appeal against a decision. It is different from the Early Conciliation service because both parties ask the arbitrator to reach a decision.

The way arbitration works

A case is heard by a single Acas arbitrator and the format is as follows: 

• each side can be represented and witnesses can be called

• the hearing is held at a convenient but neutral venue, such as a hotel or the Acas office, but both parties can agree to hold it at the workplace

• written evidence can be presented but only in advance, unless the arbitrator allows other such evidence on the day

• the arbitrator looks at the case using the general principles of fairness and good conduct in employment relations and the principles of the Acas Code and its Discipline and grievances at work handbook

• the arbitrator does not have to apply legal tests or rules, except EU law where appropriate

• after the hearing, the arbitrator makes his or her decision and this is binding on the two parties

• the remedies which the arbitrator can award are the same as in an employment tribunal

• once the arbitration agreement has been signed, the ex-employee can withdraw from the process but the employer may not.

Awards are based on the same formula as used by employment tribunals for the basic award and what is considered as just and equitable as a compensatory award. Reinstatement or re-engagement orders are possible too, if the ex-employee wants this.

Highly complex cases or those that turn on legal points, such as length of continuous service, are generally not considered suitable for the arbitration scheme.