Discrimination Settlement Agreement

One of the many reasons why individuals are offered settlement agreements is when they are in a dispute related to discrimination.


There are many different forms of discrimination in UK employment law, including discrimination on the grounds of age, sex, sexuality, race, religion or belief and disability. It is common practice for employers to compromise discrimination disputes in the workplace by entering into a settlement agreement with the individual concerned.


One of the reasons for this is the stigma which is attached to discrimination claims which provides an incentive for employers to compromise those claims before they arrive at the Employment Tribunal which is a public forum.


If an employee has suffered less favourable treatment on one of the prohibited grounds, a discrimination claim will arise which may be brought within three months of the date of the act or omission complained of. In this case, the individual will typically raise a grievance and contact the ACAS advisory service before issuing an Employment Tribunal claim.


The grievance process and the ACAS conciliation process are opportunities for the employer to engage with the individual and to agree on appropriate terms of the settlement concerning the prospective discrimination claim.

Successful tribunal claims


Discrimination claims, if they are successful in a tribunal, give rise to high levels of damages. The reason for this is that the limit which applies to other claims, for example, unfair dismissal, does not apply to discrimination claims, so unlimited damages arising from loss of salary can occur. In addition to claims for loss of salary, individuals who have been subject to discrimination can also recover a sum for injury to feelings. Payments made for injury to feelings, which are set out within a settlement agreement, may be payable to the individual tax-free.

Waiving an employee’s claims of discrimination


The settlement agreement will include a list of claims that the individual is waving in consideration for accepting the settlement sums detailed within the settlement agreement.


This list will include lots of different types of discrimination claims which may arise under UK employment law. As such, the individual will be waving his or her right to pursue a discrimination claim in the Employment Tribunal when entering into the settlement agreement.


In addition to this, the individual will be confirming that if he or she chooses to pursue a claim of discrimination in the Employment Tribunal in due course, all of the monies payable, under the settlement agreement, will be repayable to the employer. This is a strong disincentive for those individuals who have entered into a settlement agreement to issue a claim after signing the settlement agreement, even if they had a discrimination claim before that date.


Although employers do offer settlement agreements to individuals who are alleging that they have been discriminated against, they must follow due process when doing so. For example, protected conversations which are the typical route for offering a settlement agreement, may not be protected if there is a valid discrimination claim at the time the conversation is taking place and the conversation lends weight to that discrimination argument.

Duty of confidentiality


A final benefit to employers of individuals entering into settlement agreements is that those individuals who have been involved in discrimination disputes will be required to maintain a duty of confidentiality, going forward. This will ensure that no discussion takes place about the details of the dispute following the termination of the employee’s employment.