What is an employment tribunal and how does it work?

In the world of employment law, there are some issues that even the best human resources (HR) teams can’t fix. And sometimes, those disputes end up in a courtroom.

Known as an employment tribunal, this is a judicial body that helps resolve disputes between employers and employees, such as cases of unfair dismissal, discrimination, equal pay and redundancy payments.

Employment tribunals are a serious matter for businesses, as they often end in substantial financial costs, operational disruption and reputational damage.

As a business, you’ll want to avoid employment tribunals as much as possible. However, it’s still important to understand what they are, how they work and how to prepare for them if you ever find yourself in this position.

Below, we’ll explain everything you need to know about employment tribunals, including what’s involved, the type of claims employees make and how to avoid them altogether.

What is an employment tribunal?

An employment tribunal is a legal hearing between employees and employers, responsible for resolving disputes around employment rights that can’t be resolved internally.

Employment tribunals are run by the HM Courts & Tribunals Service (HMCTS), with hearings held by an employment judge.

According to the government website, there were 37,000 employment tribunals in Q4 2024/25 – 30% of which were single claims, while 70% were multiple claims. 

Before the hearing can start, the employee must first contact the Advisory, Conciliation and Arbitration Service (ACAS), which offers early mediation to help resolve a dispute without making a formal claim.

Why might employees make a claim?

There are several reasons why employees claim in an employment tribunal. These include:

• Unfair dismissal: an employee’s contract is terminated without good reason or a fair process.
• Wrongful dismissal: an employer breaks the terms of the employment contract, such as failing to provide the correct notice period or pay.
• Constructive dismissal: the employer’s actions force the employee to resign.
• Discrimination: an employee claims to be mistreated due to age, gender, disability, race, religion, marriage/civil partnership or sexual orientation.
• Equal pay: disputes over the gender pay gap for work of equal value.
• Unlawful pay deductions: an employer deducts from the employee’s salary without consent or the legal right to do so.
• Unpaid wages: not paying the employee’s full salary, paying below the National Minimum Wage or not including holiday pay in the final wage slip.
• Redundancy rights: an employee claims pay for workplace redundancy, or challenges the fairness of a redundancy dismissal.
• Whistleblowing: an employee is treated poorly (e.g. demotion, termination, bullying/ostracisation, etc.) as a result of whistleblowing.
• Parental rights: an employer fails to meet the legal requirements for maternity and paternity leave.
• TUPE issues: an employer fails to follow the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) law, which protects employee rights when a business, or part of a business, is transferred to a new owner.
• Working time violations: asking the employee to work excessive hours, or failing to accommodate breaks and holiday entitlements.

How does an employment tribunal work?

Employment tribunals involve hearing from both parties to determine exactly what happened and applying legal tests to determine if a “relevant failure” (e.g. unfair dismissal, discrimination, etc) has occurred before deciding whether the employee’s rights have been violated.

The possible outcomes of an employment tribunal can either be decided before a full hearing or after.

If the tribunal decides not to proceed with a full hearing, the outcome could be:

• Settlement via ACAS: the claimant and respondent reach a voluntary, legally binding agreement through ACAS at any stage of the process, which is recorded on a COT3 form.
• Private settlement agreement: the parties involved agree to terms outside of ACAS and formalise the agreement with a settlement agreement, leading to the claim being withdrawn.
• Claim withdrawal: the employee decides to withdraw their claim, often because they’ve either found a new job, realised they have a weak claim or accepted a private settlement offer.
• Claim dismissed: the judge rejects the claim because it missed the deadline or is legally deficient.
• Default judgment: the employer fails to submit a response (ET3 form) on time, so the tribunal issues a default judgment in favour of the claimant.

On the other hand, if the case proceeds to a hearing, the tribunal’s decision will either dismiss or uphold the claim. 

What happens at an employment tribunal?

The process of an employment tribunal is designed to be straightforward and fair for both parties. Here’s what the process typically looks like and what you can expect. 

1. Early mediation

As mentioned above, the claimant must first contact ACAS for early conciliation. They must inform them of their intent to make the claim, usually within three months (minus one day) from when the problem first arose.

From there, an ACAS mediator will work with the employee to resolve the dispute without the need for a tribunal. The conciliation period can last up to six weeks.

If a settlement is reached, it is recorded in a COT3 agreement. However, if there isn’t a settlement, ACAS will issue an early conciliation certificate, which includes a unique reference number that must be used to proceed to the next stage.

2. Claim and response

The claimant formally submits their claim to the employment tribunal with an ET1 form within the time limit. The tribunal then reviews the claim and, if accepted, a copy will be sent to the employer.

Once you have received the ET1, you will have 28 days to submit your defence with an ET3 form. With this, you are expected to detail your version of events and why you are denying the employee’s claim. 

If you fail to respond to the claim within this time period, the tribunal may automatically judge in favour of the claimant. 

3. Case management and preparation

This stage is all about preparing the case for the final hearing and is often where most cases settle. Here’s what you can typically expect in this phase:

Case management orders (CMOs)

Once both parties have submitted their documents, the employment judge will review them and issue case management orders (CMOs). 

Put simply, these are timetables and instructions that set out deadlines to complete specific tasks in the case – such as disclosing documents or witness statements – so that both parties are prepared for the hearing.

Preliminary hearings (if applicable)

In some cases, an employment judge may hold a preliminary hearing, which takes place before the main hearing. These are less formal than the main hearing and are often conducted via phone or video link.

There are two types of preliminary hearing – case management preliminary hearing (CMPH) and preliminary issue hearing (PIH).

A CMPH sorts out the practical details, such as setting deadlines for when documents need to be shared, deciding how long the main hearing will take and checking if any witnesses will be called. It also ensures the case is fully prepared for trial, and involves the employment judge issuing CMOs for both parties.

On the other hand, a preliminary issue hearing (PIH) deals with any important legal issues that could affect whether the case goes ahead. For example, whether the claim was made in time, if the claimant was actually an employee or self-employed, if part of the claim should be struck out, or whether the claimant has a disability under The Worker Protection (Amendment of Equality Act 2010) Act 2023.

Schedule of loss

A schedule of loss is a document that details the financial compensation the claimant seeks from an employer’s unlawful actions. It also lists the specific types of losses the claimant has faced – such as wages, holiday pay and workplace pensions – and any supporting documents that prove the losses claimed.

This helps the employment tribunal understand the full financial impact of the employer’s actions and determine the compensation owed.

The employer can also provide a counter-schedule of loss to respond to the claimant. Its purpose is to dispute the amount of compensation the claimant is seeking (often by explaining why the figure is incorrect, too high or shouldn’t be paid). It also sets out the employer’s own calculation of what they believe the claimant is entitled to, which is typically lower (if anything at all).

4. The final hearing and judgment

The final hearing is either held individually by the employment judge, or with two additional lay members – one that represents the employer (e.g. a HR professional) and one representing the employee (e.g. a trade union representative). The final hearing can either take place in person or online.

Here’s a breakdown of the typical process:

• Introductions of relevant parties
• Opening statements from each party (each summarises their case)
• Both parties present their evidence by calling witnesses
• Each witness will be questioned (“cross-examined”) by each party’s representative
• After all the evidence is presented, both parties make a closing statement

After the hearing has finished, the tribunal will either state its decision on the day or issue a reserved judgment in writing shortly after.

How to prepare for an employer tribunal

In the event of an employment tribunal, it’s crucial to be as prepared as possible. Here are a few things to consider:

• Take time to understand the claim: make sure to thoroughly review the ET1 claim to determine which elements are true and which will be denied.
• Gather the relevant documents: collect all the relevant documents, such as contracts, pay slips, emails and policies – even those that might not support your case. 
• Organise the document bundle: this means arranging the documents in order of date, including a clear index, and creating copies for each member of the tribunal panel (e.g. the Employment Judge and your representative). 
• Seek legal or professional advice: consider getting support from an employment lawyer, an HR consultant or a legal representative – especially if the case is complex or involves serious allegations like discrimination or whistleblowing. 
• Choose witnesses: decide who should be your witnesses to support your defence. For example, if someone claims unfair dismissal against you, the dismissing manager would need to justify and give evidence as to why they made this decision. 
• Prepare witness statements: any witness statements should clearly detail the witness’s version of events and cross-reference with any relevant documents. Make sure that they’re comfortable with what’s written, and that they’re fully involved in preparing their statement.
• Answer questions clearly: when the employment judge asks you questions, answer them directly and do not waffle. Also, be honest in your answers, including admitting when you don’t know the answer to a question. If you need to refer to a document to help you, simply ask to do so.
• Explain proper conduct to witnesses: inform witnesses that they mustn’t discuss the case in public areas (e.g. a local cafe or on public transport) so that sensitive information isn’t overheard. Also remind them to act respectfully and not to react loudly to evidence they disagree with (e.g. shouting or storming out of the room).

Employment tribunal decisions

While there aren’t specific figures on how many tribunals are won by employers or employees, research by ACAS found that 77% of employment tribunal cases didn’t go on to have a hearing between January and March 2025. 

However, when hearings do take place, the tribunal will simply judge in favour of the employer or the employee.

What happens if I win a tribunal?

If you win the tribunal, the employee’s claim will be dismissed. This means that you will not be required to pay compensation to the employee or fulfil any remedies for them. 

However, keep in mind that the employee has the right to appeal to the Employment Appeal Tribunal (EAT) within 42 days of the written judgment. That being said, they can only do so if they believe the employment tribunal made a legal mistake – not because they’re unhappy with the outcome.

What happens if an employee wins a tribunal?

On the other hand, if the employee wins the tribunal, you will be required to take certain action. For example, paying the requested compensation, reinstating the employee to their job or making specific changes to your workplace. You will also have 42 days to appeal the decision.

The consequences of losing an employment tribunal mean you’ll face financial losses, corrective non-financial orders, and potentially serious operational and reputational damage.

The most common financial penalties include:

• Unfair dismissal: compensation is split into a basic award (e.g. statutory redundancy pay) and a compulsory award (e.g. for lost wages, pension, etc.). The compensatory award is currently capped at  £118,223, or 52 weeks’ pay.
• Discrimination/whistleblowing: these awards are uncapped, so they can result in significant financial loss and include damages for “injury to feelings” (compensation for distress, anxiety and humiliation).
• Recoupment of benefits: you must pay back any state benefits (e.g. Jobseeker’s Allowance) the claimant received during their period of unemployment to the Department for Work and Pensions (DWP).
• ACAS code uplift: if you’re found to have failed to follow the ACAS Code of Practice on disciplinary and grievance procedures, the tribunal can increase the compensation award by up to 25%.

Beyond financial penalties, preparing for an employment tribunal means that your HR team, managers and employees will have to focus their attention on the case, leading to disrupted workflows, reduced productivity and less employee engagement.

Moreover, as employment tribunal hearings are generally open to the public, there’s a serious risk to your reputation – especially if the tribunal gets covered by the media. This can make it difficult to attract and retain talent, as well as damage customer retention and relationships.

How to avoid employment tribunals

Given how detrimental employment tribunals can be both financially and reputationally, it’s important to try and avoid them as much as possible. 

The obvious answer is to make sure you never put employees in a position where they need to take you to a tribunal. Therefore, you should follow these practices:

• Develop clear and fair policies: make sure your company policies — especially those around disciplinary action, grievances, discrimination and dismissal — are clear, consistent and up to date. This will help prevent misunderstandings and ensure fair treatment across the business.
• Foster a positive workplace culture: encourage open communication, respect and inclusivity in your organisational culture. When employees feel valued and heard, they’re less likely to escalate concerns or take legal action.
• Address issues early: tackle small problems before they turn into major disputes. This means handling complaints quickly, having informal discussions where possible and following your internal procedures for disciplinary matters.
• Seek professional advice: if you’re not sure how to handle a workplace issue, get advice from an HR consultant, employment lawyer or ACAS. This kind of professional guidance can help you make fair and legal decisions to reduce the risk of a claim being made against your business.
• Train your managers: your frontline managers often make decisions that lead to disputes, such as handling absence or performance. Therefore, you should provide them with regular training on employment law, conflict management and fair treatment to prevent costly mistakes.
• Document everything: make sure to keep detailed, accurate records of meetings, decisions, performance issues and disciplinary/grievance processes. This can help protect you if a dispute ever escalates, and shows that you acted fairly and reasonably.
• Encourage mediation: offer informal or formal mediation to resolve conflicts between employees, or between staff and management. An impartial mediator can often defuse tension and avoid legal action.
• Regularly review your practices: audit your HR processes and employment contracts to make sure they’re compliant with current employment law. This can change frequently, so staying up to date will help you reduce risk.

Conclusion

Employment tribunals can be stressful, time consuming, and expensive for employers – both financially and reputationally. 

While sometimes unavoidable, most disputes can be prevented with fair treatment, clear policies and strong communication. This can help reduce the risk of claims being brought against your business.

And if a tribunal does arise, being well-prepared and cooperative throughout the process can help you achieve the best possible outcome.

Also, having a fair and supportive working environment isn’t just about avoiding tribunals, but building a more engaged workforce and a favourable reputation as a responsible employer.