When a discrimination claim is in play

These are not edge cases

Guidance on settlement agreements tends to treat discrimination as a complication that occasionally arises. The caseload says otherwise.

Two things stand out. The discrimination jurisdictions together received more complaints than unfair dismissal did. And disability discrimination alone, at 4,051, is the second largest single category in the entire employment tribunal — with 15,592 complaints still open at the end of the quarter.

Add whistleblowing, which is not discrimination but behaves like it for the purposes below — no qualifying service, no cap — and that is another 2,202 complaints.

Your agreement has to satisfy two statutes

The naming page sets out all the routes side by side; this section is about the one that catches people out.

This is the part that is genuinely easy to get wrong, and the consequence of getting it wrong falls on the employer rather than on you — which is exactly why it is worth spotting.

Section 203 of the Employment Rights Act 1996 governs the waiver of claims under that Act: unfair dismissal, redundancy pay, unlawful deductions, and so on. It says nothing about the Equality Act. The Equality Act has its own provision.

Compare that with the s.203(3) list and the overlap is obvious — in writing, relates to the particular complaint, advice from an independent adviser, that adviser insured, the adviser identified, and a statement that the conditions are met. But they are different sections of different Acts, and each one only settles its own claims.

The practical check takes ten seconds. Does the agreement name the Equality Act complaint among the claims it settles? Section 147(3)(b) requires the contract to relate to the particular complaint, in the same way s.203(3)(b) requires it to relate to the particular proceedings. An agreement that lists twenty employment-rights claims and never mentions discrimination has not settled your discrimination claim, however comprehensive it looks.

The adviser rules are stricter here

Both Acts require independent advice and both exclude the other side’s people. The Equality Act goes further.

Section 203(3B) of the Employment Rights Act excludes someone who is, is employed by, or is acting for the employer. Section 147(5) adds a category: anyone connected to a party to the contract or the complaint. So the test you apply to a firm your employer has recommended is a little more demanding when a discrimination claim is in the mix. What the statutory role requires.

Three things that change the value

None of these is about how serious the conduct was. They are structural, and they are the reason a discrimination element moves a settlement figure more than almost anything else.

1. No qualifying period. Ordinary unfair dismissal normally requires 2 years’ continuous service. The Equality Act requires none. An employee of four months with a discrimination claim has a claim; an employee of four months without one usually does not.
2. No statutory cap. Compensation under the Equality Act is tied to what an ordinary civil court could award. EqA 2010 s.124(6) puts it directly: the amount “corresponds to the amount which could be awarded by the county court or the sheriff”. There is no equivalent of the unfair dismissal ceiling.
3. Injury to feelings. Available in a discrimination claim and not in an ordinary unfair dismissal claim. It is assessed on the facts against published guidance bands rather than by any formula, which is why our calculator flags that the element exists and declines to put a number on it.

Taken together these are why the factors on step three of the calculator weigh discrimination more heavily than length of service. The full scoring rule.

The protected conversation probably was not

If your employer opened the settlement conversation by saying it was “protected”, that almost certainly referred to s.111A of the Employment Rights Act 1996. Read the first line of it carefully.

“In any proceedings on a complaint under section 111” — section 111 is ordinary unfair dismissal. The statutory protection does not extend to an Equality Act claim, an automatic unfair dismissal claim, or a whistleblowing detriment claim.

For those, the employer has to fall back on the ordinary without prejudice rule, which requires a genuine existing dispute at the time of the conversation. If settlement was raised out of nowhere, with no grievance and no dispute on the table, there may be nothing protecting that conversation in a discrimination claim — in either direction.

That materially changes the balance of a negotiation and it is among the first things worth putting in front of a solicitor. More on s.111A, including the subsection that takes the protection away where there has been improper behaviour.

Two neighbouring situations are worth ruling in or out while you are here: constructive dismissal, where the time limit runs on a different test, and the clause that names the Equality Act complaint, whose absence is the defect this page exists to warn about.

The clock runs differently

Three months, as elsewhere — but the extension test is different. For unfair dismissal a tribunal may extend only where it was not reasonably practicable to claim in time. Under the Equality Act it may extend to whatever period it thinks just and equitable, which is a wider discretion.

Do not read that as slack. It is a discretion rather than an entitlement, and the more useful part of s.123 for most people is the rule that conduct extending over a period is treated as done at the end of that period. A course of conduct running over months is not automatically out of time because it began a year ago. Acas early conciliation remains compulsory before any claim and still pauses the clock.

What to check in the draft

1. Is the Equality Act complaint named among the claims settled?
2. Does the agreement state that the conditions in s.147 are met, as well as those under s.203?
3. Is the adviser identified, and are they clear of the wider s.147(5) exclusion?
4. Does the confidentiality clause carve out protected disclosures? It is void to that extent anyway under s.43J, but a draft that already says so tells you something about who wrote it.
5. Is any element described as injury to feelings, and is it in the part of the payment that can use the £30,000 threshold? How the split works.

All five are read-and-answer questions, which makes them a good use of a sign-off appointment that your employer is probably paying for. What that costs.

Common questions