Negotiating and settling your discrimination claim

This advice applies to England, Wales and Scotland

UPDATED OCTOBER 2023

You may have been made a settlement offer by your employer, or be keen to understand more about settlement of a potential claim. To decide how much to settle for, it’s helpful to know:

• How much compensation you could get in tribunal

It is never possible to say exactly how much you would be awarded, but you can estimate. There is a helpful guide to this on the Citizens Advice website: Work out how much compensation you could get for discrimination

• How strong your case is

You can never be sure that you will win — there is always a chance that you could go to tribunal and lose. Accepting less than you might get at tribunal avoids this risk. If the outcome is uncertain, for example your employer has a defence which a tribunal could accept, then you certainly wouldn’t be expecting to settle for the full amount you calculate you might get if you win. It isn’t as crude as saying “I have a 50% chance of winning £6,000 so I want £3,000”, but that’s the sort of assessment you need to make.

• How far you are prepared to go if you don’t settle the case

If you know you don’t want to go to tribunal you have no alternative but to reach a settlement. You will have to settle for the best offer your employer will make, even if that seems low.

• What the amount would mean to you personally

Getting a settlement of £4,000 just after you’ve lost your job could make your life much easier in terms of being able to pay your mortgage and keeping your home, than getting £8,000 at a hearing in a year’s (or longer) time.

• How to negotiate

Work out what your “bottom line” is using the steps above — what is the minimum you want to get out of the negotiation?

Show your employer you have a good case and what it’s worth before you start negotiating, or at least explain to your employer how compensation for discrimination is calculated. Do a schedule of loss if you haven’t already. A small employer without an HR department won’t be aware how high discrimination awards can be. Explain why you think you have a good claim. However don’t exaggerate things — that can make it difficult to reach a settlement.

Be prepared to make the first offer and to make counter-offers (which just means putting forward your own, different offer) if you reject an offer that your employer has made. If you are making the first offer it should be based on the estimated value of your claim but not your bottom line, as this keeps the negotiations going and improves the chance of a settlement.

Don’t forget that other things can be important as well as compensation — things like getting an apology, a good reference or a policy change in the workplace. However some employers would rather pay more compensation than provide an apology or reference, so think about which is more important to you and your future employment, and what might be realistic based on what you know about your workplace.

Think about the case from your employer’s side of things — is there anything you could use to persuade them to settle?

• If you’re still working for them, it would be good for both of you to solve this and move on so you can get on with your job and put it all behind you.
• If you’ve already left work but are going (or might go) to tribunal, settling the case will save them time and money defending a case. Most employers will employ lawyers and can spend several thousands of pounds defending a case.
• A tribunal case could be bad publicity for them.
• If you’re offering to settle for much less than you might get in tribunal they could be saving themselves a lot of money.

It’s important not to use these points in a threatening way, but you can raise them in a way which aims to persuade your employer to settle. For example “it isn’t in anybody’s interests to spend the next 6 months arguing and spending money on legal bills over this. I want to move on and I’m sure you do too”.

Keep a note of anything that’s said in person, by phone, email or text, and date it.

First offers

It’s not a good idea to accept a first offer — it’s not usually the best one you’re going to get if you negotiate well. Your employer might make a “commercial” first offer — this means they say they are only prepared to make a very low offer to see if you take it to make you go away. This is almost always a test to see if you are serious about proceeding with a case, so don’t be offended. Stick to your guns — repeat the likely value of your claim, and say what you’re prepared to accept.

Dealing with two respondents

You might be making, or intending to make, a claim against more than one person (eg your agency and the company you actually worked for, if you are an agency worker).

You can settle the claim against just one of these and still continue against the other but this isn’t normally a good idea. It’s usually better to get both of the parties to agree to pay you the compensation ‘jointly’. This means that if the money isn’t paid you can take action to force either one of them to pay the whole amount you’ve agreed to settle for.

Using Acas conciliation services to help you negotiate

You can use the conciliation service Acas to help you settle a dispute with your employer, whether or not you decide to go ahead to tribunal. If you do want to go to tribunal, the first step is to register with Acas for Early Conciliation anyway, and they can help you reach a settlement. Read more about Acas Early Conciliation on the Citizens Advice website: Using early conciliation.

They won’t be able to give you advice about the strength of your case or what it’s worth, but will help by explaining to your employer why settling would be a good idea. You might find this much easier than negotiating with your employer yourself. They usually deal with cases by phone and email, and will pass any offers your employer makes on to you and will pass your offers to your employer.

Acas will need you to help them by explaining what you want — and a schedule of loss would be very helpful for them to discuss with your employer.

Settling your discrimination claim

If you settle your claim you will need to sign an agreement. If Acas have helped you to settle they will prepare a COT3 agreement. Otherwise, the employer’s solicitor will usually prepare the agreement.

Some terms your employer will usually want to include:

• Confidentiality — that you cannot tell anyone about the settlement (usually immediate family and advisers are okay). Check the wording carefully — sometimes the wording means you can’t tell anyone about the facts leading up to your complaint as well as the settlement terms. If you want your employer also to keep things confidential, make sure the agreement says so. You don’t have to agree to keep things confidential but most employers won’t be prepared to settle if you don’t. Employers can’t enforce some types of confidentiality agreements, for example if it would prevent you from ‘whistleblowing’ or reporting a crime. You can read more about confidentiality and Non-disclosure agreements on the Acas website.
• That you can’t make negative comments about your employer eg in the press or on social media. If your employer wants to include something about this you should make sure there is a term saying they can’t make such comments about you either.
• That you are settling all claims you may have against your employer. Any other claims you might have will be settled, not just the discrimination you are complaining about, so be sure there is nothing else you need to deal with. The agreement normally says that personal injury and pension claims won’t be settled by the agreement, so you’ll still be able to make claims about those matters, if they are relevant.
• What will happen if you break the confidentiality agreement. This usually means they’ll ask you to repay the money.
• Tax — some compensation settlements will be taxable. It’s normal for a settlement agreement to say that if tax has to be paid you will pay it, not your employer, so it’s important to know when that might apply and take it into account when settling. Sums relating to termination payments are exempt from tax up to the first £30,000. For balances above £30,000, there are complex rules about which portions of the settlement sum are taxable and you should seek further advice before agreeing to pay any tax that might be payable on the amount.
• Confirmation that you’ve had legal advice from a solicitor or other adviser about the agreement (essential if you are signing a settlement agreement, rather than agreeing a COT3 through Acas).
• That you’ll write and tell the tribunal that you want to withdraw your claim. If Acas are doing a COT3 they’ll tell the tribunal on your behalf. This means it’s very important to be clear when you have finalised your settlement and are happy to withdraw any claim you have made.

Some terms you will or might want to include:

• How much will be paid, how it will be paid and when (usually within 14 days of the employer receiving the agreement signed by you)
• If you’re claiming against more than one person, which one is responsible for making the payment (normally you should ask that they will “jointly and severally” pay)
• Other terms you’ve negotiated, like amendments to company policies, or an agreement to offer you a new job
• Reference. If a reference is agreed it’s normal to attach a copy of the reference to the agreement and say that when a reference is requested a copy of the attached reference will be provided. This will mean your employer isn’t able to say anything else to someone asking for a reference
• Apology. This is normally agreed and attached to the agreement, or sent to you afterwards if you prefer.

Legal advice on (non-Acas) settlement agreements

A settlement agreement won’t stop you making a legal claim unless you have had legal advice on the terms of the agreement.

If you don’t have an adviser your employer will usually agree to pay for you to get advice, so that the agreement is valid. It’s normal for them to agree to pay around £500 for this, although this can vary. This will only be advice on what the agreement means, not your claim itself or whether it’s a good deal.

A solicitor is qualified to give advice on these agreements, as is an adviser in an advice agency or trade union, provided:

• They have been authorised in writing by the agency or union as competent and authorised to advise on settlement agreements
• They have insurance to cover their advice
• The adviser is named personally in the settlement agreement
• They aren’t being paid to give the advice.

The information in this article is correct as of the date of publication

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