If we settle out of court, can the employee be prevented from making a Tribunal claim later?

Yes – there are two ways to do this.

• COT3 settlement – if you settle through Acas you can get a COT3 settlement which is a legally binding agreement that stipulates that neither side can reinstate the claim at a later date.
• Settlement agreement – formerly known as a ‘compromise agreement,’ this means that the employee agrees to waive their statutory employment right for an agreed settlement for which they’ve received independent legal advice (usually paid for by the employer). Acceptance of this settlement prevents the employee from bringing back the claim. Settlement agreements must be drafted carefully, as legal decisions based on the effectiveness of settlement agreements in the past have gone against employers due to the wording involved. Always obtain legal guidance when creating a settlement agreement.