Employment Law Glossary UK

ACAS: Advisory, Conciliation and Arbitration Service — a government-funded independent body that helps resolve workplace disputes. You must notify ACAS before starting an employment tribunal claim (early conciliation). ACAS also publishes Codes of Practice that tribunals take into account.
Basic Award: The first component of an unfair dismissal or constructive dismissal award. Calculated using the statutory redundancy pay formula — based on age, years of service, and weekly pay (capped at £643/week). Maximum basic award is currently approximately £21,862.
Compensatory Award: The second component of an unfair dismissal award — compensation for your actual financial losses (lost earnings, future loss, pension contributions, etc.). Currently capped at the lower of one year's gross pay or £115,115. This cap is being abolished in January 2027 under the Employment Rights Act 2025.
COT3: A settlement agreement facilitated by ACAS that resolves employment tribunal claims. Named after the form used. Unlike a standard settlement agreement, independent legal advice is not legally required for a COT3 to be valid — but it is strongly recommended.
Constructive Dismissal: Where an employee resigns in response to a fundamental breach of their employment contract by the employer. The law treats the resignation as a dismissal, allowing the employee to claim unfair dismissal compensation.
Contributory Fault: Where an employment tribunal finds that the employee's own conduct contributed to their dismissal. The tribunal can reduce both the basic and compensatory award by a percentage reflecting the employee's contributory fault.
Early Conciliation: The mandatory process with ACAS that must be completed before an employment tribunal claim can be submitted. Pauses the tribunal time limit during the conciliation period. Free and confidential.
ET1 / ET3: ET1 is the claim form used to submit an employment tribunal claim. ET3 is the employer's response form. Both are submitted online via gov.uk. There is no fee to submit an ET1.
Ex Gratia Payment: A payment made by an employer out of generosity, without any legal obligation to do so. In a settlement agreement context, the ex-gratia element is the compensation paid over and above any contractual or statutory entitlements. The first £30,000 of qualifying ex-gratia payments is tax-free.
Garden Leave: A period during which an employee is required to stay away from the workplace but remains employed and continues to receive full pay and benefits. Often used during a notice period where the employer does not want the employee in the office (e.g. due to confidentiality concerns or client relationships).
Gross Misconduct: Conduct serious enough to justify immediate dismissal without notice (summary dismissal). Examples include theft, violence, fraud, serious breach of health and safety, or serious insubordination. Even gross misconduct dismissals must follow a fair procedure.
Injury to Feelings: Compensation in discrimination claims for the distress, humiliation and emotional impact caused by the discriminatory treatment. Awarded according to the Vento bands — currently ranging from approximately £1,100 to £58,700+. Not subject to any cap.
Mutual Trust and Confidence: An implied term in every employment contract that both employer and employee will not, without reasonable cause, act in a manner likely to destroy or seriously damage the relationship of trust and confidence. Breach of this term by the employer is the most common basis for constructive dismissal claims.
PENP (Post-Employment Notice Pay): A calculation introduced in April 2018 that identifies the taxable element of any termination payment relating to an unworked notice period. All PENP is subject to income tax and NI — regardless of whether a PILON clause exists.
PILON (Payment in Lieu of Notice): A payment made instead of requiring an employee to work their notice period. Always fully subject to income tax and National Insurance since April 2018 — not part of the £30,000 tax-free termination payment allowance.
Protected Conversation: A conversation about ending the employment relationship made under section 111A of the Employment Rights Act 1996. Cannot generally be referred to in subsequent unfair dismissal proceedings (but does not protect against discrimination or whistleblowing claims).
Protected Disclosure (Whistleblowing): A disclosure made in the public interest about wrongdoing (e.g. criminal activity, health and safety breaches, environmental damage, miscarriages of justice). Employees who make protected disclosures are protected from dismissal and detriment — awards for dismissal are uncapped and carry a 10% additional uplift.
Redundancy: A specific form of dismissal under the Employment Rights Act 1996 — where the employer closes the business, moves location, or no longer requires work of the type the employee performed. Entitles qualifying employees to statutory redundancy pay.
Settlement Agreement: A legally binding contract under which an employee agrees to waive employment tribunal claims in exchange for a financial payment. Must meet strict legal requirements (including independent legal advice) to be valid. Previously known as a compromise agreement.
SOSR (Some Other Substantial Reason): A catch-all potentially fair reason for dismissal under section 98 ERA 1996 — used where the reason doesn't fit neatly into capability, conduct, redundancy or illegality. Examples include personality clashes with key staff, business reorganisation, or third-party pressure to dismiss.
Statutory Redundancy Pay: The minimum redundancy payment required by law, calculated using a formula based on age, continuous service (capped at 20 years) and weekly pay (capped at £643/week in 2025/26). Tax-free up to £30,000 combined with any ex-gratia payment.
TUPE: Transfer of Undertakings (Protection of Employment) Regulations 2006. Where a business or service contract transfers to a new employer, employees automatically transfer on their existing terms and conditions. Dismissal for a TUPE-connected reason is automatically unfair.
Unfair Dismissal: A statutory right under the Employment Rights Act 1996 allowing employees with 2+ years' continuous service to challenge a dismissal as unfair. Requires the employer to have a fair reason and to have followed a fair process.
Vento Bands: The three guideline ranges for injury to feelings awards in discrimination cases, established in Vento v Chief Constable of West Yorkshire Police [2002] and updated periodically. Currently (2025/26): Lower £1,100–£11,700; Middle £11,700–£35,200; Upper £35,200–£58,700+.
Without Prejudice: A legal principle protecting genuine settlement discussions from being used as evidence in legal proceedings. Allows both parties to negotiate freely. Note: "without prejudice" written on a document does not automatically make it protected — the communication must be a genuine attempt to settle a dispute.