Employment Tribunal Settlement: A Complete Guide for UK Employees & Employers
By Solidaire Solicitors – Employment Law Specialists
An employment tribunal settlement allows workplace disputes to be resolved without the stress, cost, and uncertainty of a full tribunal hearing. In the UK, most employment disputes are settled before reaching a final tribunal decision—saving time, money, and reputational risk for both parties.
This guide explains what an employment tribunal settlement is, how it works, average compensation, and whether settling is better than going to tribunal.
What Is an Employment Tribunal Settlement?
An employment tribunal settlement is an agreement between an employer and an employee to resolve a workplace dispute before or during tribunal proceedings.
The settlement usually involves:
A financial payment to the employee
An agreement to end the legal claim
Confidentiality and non-admission of liability clauses
Once agreed, the employee cannot pursue the same claim again.
Common Employment Claims Settled Before Tribunal
Many UK employment disputes are settled early, including:
Unfair dismissal
Redundancy disputes
Discrimination (age, gender, race, disability)
Constructive dismissal
Breach of contract
Whistleblowing claims
Unpaid wages or holiday pay
Employers often prefer settlement to avoid legal costs and negative publicity.
How Does an Employment Tribunal Settlement Work?
1️⃣ ACAS Early Conciliation
Before making a tribunal claim, employees must contact ACAS Early Conciliation.
Most settlements happen at this stage.
2️⃣ Settlement Negotiations
Both sides negotiate:
Compensation amount
Reference wording
Confidentiality terms
Termination date
3️⃣ Settlement Agreement or COT3
Settlements are finalised through:
COT3 Agreement (via ACAS), or
Settlement Agreement (requires independent legal advice)
Once signed, the case is legally closed.
Average Compensation in Employment Tribunal Settlements (UK)
There is no fixed amount, but typical settlement ranges include:
| Claim Type | Typical Settlement |
|---|---|
| Unfair Dismissal | £5,000 – £25,000 |
| Discrimination | £10,000 – £50,000+ |
| Redundancy Disputes | £3,000 – £20,000 |
| Constructive Dismissal | £10,000 – £30,000 |
💡 Compensation depends on:
Length of service
Salary
Strength of the claim
Employer risk and legal exposure
Is Settling Better Than Going to an Employment Tribunal?
✅ Advantages of Settlement
Faster resolution
Guaranteed outcome
Lower legal costs
Less stress and publicity
Confidential agreement
❌ Risks of Tribunal Hearings
Long delays (often 12–18 months)
No guaranteed win
Legal expenses
Public judgments
Emotional strain
👉 In most cases, settlement is the safer and smarter option.
Can You Settle After a Tribunal Claim Is Filed?
Yes.
Employment tribunal cases can be settled:
Before the hearing
During the hearing
Even shortly before judgment
Judges often encourage settlement to save tribunal time.
Is an Employment Tribunal Settlement Tax-Free?
Up to £30,000 compensation may be tax-free
Notice pay and wages are taxable
Legal fees are often paid separately
Always seek legal advice to structure the settlement correctly.
Do You Need a Solicitor for a Tribunal Settlement?
Yes—especially for Settlement Agreements, UK law requires independent legal advice.
A solicitor can:
Negotiate higher compensation
Ensure fair terms
Protect your legal rights
Avoid hidden clauses
Employment Tribunal Settlement Advice from Solidaire Solicitors
At Solidaire Solicitors, we help employees and employers:
Negotiate strong employment tribunal settlements
Maximise compensation
Avoid costly tribunal hearings
Finalise legally secure agreements
