Dispute Settlements

  • Dispute Resolution
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Peninsula Group, HR and Health & Safety Experts

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In this article, we’ll explain what a dispute resolution is, the different types of settlement and when you should use each type.

Disputes in the workplace are not uncommon. It’s natural for employees from diverse backgrounds, and with different personalities, to have varying opinions and beliefs.

That said, if unaddressed, conflict at work may result in declining working relationships. Especially if it also involves management.

It could even lead to grievances, resignations, and costly tribunal claims.

To deal with conflict effectively, it’s important to understand why it can arise in a workplace.

In this article, we’ll explain what a dispute resolution is, the different types of settlement and when you should use each type.

What is a settlement and dispute resolution?

In its most basic form, dispute resolution, or settlement, is when you try to find a solution to a disagreement between two or more parties.

Essentially, it’s a means of settling a dispute without needing of an expensive legal claim.

Dispute resolution methods can be used for all settlements, except to decide whether a law has been broken (where settling contract disputes or sexual harassment are concerned, for example).

What can complicate settlement is the method that’s used to resolve the dispute. This is because the various forms of resolution have a range of factors and costs.

Why do companies settle out of court?

The UK legal system has taken a stance to encourage resolution-based processes. If a contract has a provision for dispute resolution, a party who ignores this is almost certainly going to end up being criticised by a court and may be financially penalised.

Courts will take a dim view of parties who simply litigate with no attempt to resolve the dispute on a more informal basis.

Additionally, an out of court settlement is much more cost effective for employers and employees.

The costs of going to an employment tribunal can be rather off putting for parties, as well as the time it takes to undergo a court proceeding – they can last for months or even years.

What happens at a settlement meeting?

There are four main types of dispute resolution methods that can be used to reach different types of settlements. They are:

  • Negotiation.
  • Mediation.
  • Conciliation.
  • Arbitration.

Employers must make sure they are clear on what happens at a settlement meeting. There’s a different approach for each type of dispute resolution method.

In the following four sections, we’ll explain what happens at each of the main types of dispute resolution.


A settlement agreement should be open to negotiation. Negotiations give employees a chance to counter your settlement offer. Essentially, it allows you to work out a compromise, which can save a lot of time and remove the need for costly legal procedures.

Settlement negotiations don’t require third-party involvement. However, employees are allowed to be accompanied by an advisor if they choose.


Mediation is generally thought of as the first step in resolving workplace disputes. While employers can opt to bring in outside help (third-party mediation), many choose to carry it out themselves.

It allows employees to hold an open and honest discussion about issues they may be having in the workplace, offering them the platform to find a resolution between themselves.

Mediation is often called the “talking method” of dispute resolution because it puts the parties involved in a room to exchange their personal viewpoints and find a way through the issues.

The mediator does not impose a settlement but simply facilitate it.

This can be effective dealing with conflict at an early stage. However, it’s not advised that it be used if one party has clearly acted in the wrong, as this is where a disciplinary or grievance procedure should be followed instead.

It’s better used where employees simply don’t get on due to personality clashes—this is affecting their overall productivity or performance.


Conciliation is a compulsory process before an individual wishes to bring a claim to an employment tribunal.

The Advisory Conciliation Arbitration Service (Acas) is in place to offer conciliation services. This is once an employee has officially registered their intention to take their employer to a tribunal.

Its duty is to help find an amicable solution for both parties. Through early conciliation, Acas will have six weeks to negotiate a settlement between both parties and have the authority to suggest potential solutions, including a monetary settlement.

As with mediation and alternative dispute resolution, conciliation is refusable by either party, at any time, at which point Acas will issue a certificate to the employee allowing them to submit an official claim to an employment tribunal.


Arbitration is more formal as it involves an impartial third party who must make a decision on a dispute. This is another service from Acas.

The arbitrator is responsible for reviewing evidence and making a final decision on the outcome. This process is voluntary, so both sides must agree to go to arbitration and commit to abide by the arbitrator’s decision in advance.

The process will be private, rather than public and no cross-examination or swearing of oaths will take place.

Arbitration is often used in collective employment-related disputes. It can also be put in use to settle individual disputes where parties may wish to avoid the stress and expense of an employment tribunal.

What happens if you breach a settlement agreement?

Your settlement agreement is legally binding, meaning there are serious consequences if either party doesn’t keep their word.

If you breach the terms of an agreement, the employee could bring forward a legal claim, the thing a settlement aims to prevent.

A breach doesn’t have to be complete refusal to comply with the agreement. It could be as simple as not paying the correct amount or missing the agreed date for a payment to be made.

If this happens, you could be ordered to pay damages, on top of the settlement.

Expert support on dispute resolution with Peninsula

Disagreements can occur in various situations. And you have a legal obligation to deal with them, even if an employee raises the problem informally.

Failing to settle disputes between your staff can result in formal grievances, expensive employment tribunal and losing good employees.

Dispute resolution can help you to solve problems without the need to take it to the courts, but there’s lots of different ways to resolve a dispute. And you need to make sure you choose the right one.

Let Peninsula help you. Peninsula clients get access to 24-hour HR support online and over the phone. Our specialists will help you find the right approach to deal with any disputes and consult on fair settlements for you and your employees.

And if you’re not yet a client, you can still enjoy a free advice call from one of our business experts. Simply call us on 0800 028 2420.

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