The first contact is almost never the tribunal. It is a phone call or a letter from Acas, telling you that a former employee has started early conciliation and asking whether you would like to talk about settling. A lot of small employers treat that as a nuisance letter and put it to one side. It is in fact the cheapest point in the entire process, and the only one where you still control what happens next.
Here is what the sequence actually looks like from the employer's side, and where the money goes.
Step one: Acas early conciliation
Before most claims can be lodged, the claimant has to notify Acas. A conciliator contacts both sides and explores whether a settlement is possible. It can run for up to 12 weeks, and nothing about it is binding — you can decline to engage at all, and plenty of employers do.
Two things are worth understanding. First, if it settles here it settles through a COT3 agreement, which is legally binding, final, and does not require either side to admit anything. Second, if it does not settle, Acas issues a certificate and the claimant then has at least a month from that date to lodge a claim. Declining to talk does not make the claim go away; it just removes the discount you might have got for settling early.
Step two: the claim, and a hard 28-day deadline
The claim arrives as form ET1. Since fees were struck down in 2017 it costs the claimant nothing to bring, and the government confirmed in October 2025 that it will not be reintroducing claimant fees. That is the structural fact behind everything else in this article: there is no financial filter on weak claims, so a claim landing is not evidence that you did anything wrong.
Your response is form ET3 and you have 28 days from the date the claim was sent to you. Miss it and the tribunal can enter a judgment in default — the claimant wins, and you lose the right to take part in defending it. This is the single most damaging own goal a small employer can score, and it usually happens because the envelope went to a registered office address nobody checks, or because the owner was waiting to speak to a solicitor.
There is no fee to bring a tribunal claim, and costs are rarely awarded against a claimant who loses. Assume every dispute could reach this point and price your HR decisions accordingly.
Step three: the time limits are changing
For most claims the current deadline is three months less one day from the act complained of — the dismissal date, the last unpaid wage, the discriminatory act — with the clock paused during early conciliation.
That is being extended. Under the Employment Rights Act 2025, tribunal time limits rise from three months to six months in October 2026. For employers, the practical effect is that the window in which an ex-employee can decide to bring a claim doubles, so the point at which you can safely thin out a personnel file moves considerably further out.
Two more dates matter. From 1 January 2027, protection from unfair dismissal becomes a right after six months of employment rather than two years, and the cap on the compensatory award for unfair dismissal is removed. Together those make the dismissal process itself — the thing you do internally, months before any claim — the real risk control. Getting a written warning right and running a fair disciplinary process has never mattered more.
What it actually costs
Take an illustrative unfair dismissal claim. An employee aged 48 with six years' service, earning £600 a week gross, is dismissed without a proper process and wins.
The basic award is calculated like statutory redundancy pay: at that age it is one and a half weeks' pay per complete year of service, so nine weeks at £600 gives £5,400. The week's pay used in the calculation is capped, and from 6 April 2026 that cap is £751, so this employee's actual pay is used in full.
The compensatory award covers financial loss. If they were out of work for five months before finding a similar job, that is around £13,000 of lost earnings, less anything they earned in the meantime. Total award: roughly £18,400. The statutory maximum for the compensatory element is currently £123,543 or 52 weeks' gross pay, whichever is lower — and that ceiling disappears for dismissals from 1 January 2027.
Now add your own costs, which are the part employers consistently underestimate. Tribunals are broadly costs-neutral: each side pays its own legal bill regardless of who wins, and costs orders are only made where a party has behaved unreasonably or pursued a hopeless case. So defending successfully still leaves you out of pocket, plus the management time — statements, disclosure, a hearing that may run for days, and two or three of your people off the tools to attend.
That asymmetry is why so many defensible claims settle. It is not an admission; it is arithmetic.
What to do in the first week
Diary the ET3 deadline the day the claim arrives, and diary it again three days earlier. Make sure your registered office address is one where post is opened weekly, not annually.
Pull the file before anyone's memory improves: contract, offer letter, handbook acknowledgement, appraisals, warnings, notes of meetings, the dismissal letter, the appeal outcome. Do not add to it, backdate it, or tidy it — disclosure is a legal obligation and an altered document turns a defensible case into an indefensible one.
Then get an honest read on the merits before you decide anything. The right question is not whether you were unfair, it is whether the paperwork shows you were fair. Those are very different questions, and the gap between them is where nearly every small-employer loss lives — the same gap that turns a redundancy you handled decently into a claim you cannot defend.
Common questions
How long does an employment tribunal claim take to resolve?
Longer than almost anyone expects. Early conciliation alone can run up to 12 weeks, and a straightforward unfair dismissal case typically takes several months from claim to hearing, with more complex discrimination claims often waiting a year or more depending on the regional tribunal's backlog. In the meantime there are case management orders, deadlines for witness statements and disclosure of documents, each of which consumes management time. Plan for the case to sit in the background of the business for the best part of a year rather than being dealt with in a single week.
Do I need a solicitor to defend a tribunal claim?
You are not required to have one, and for a small, factually simple claim an experienced HR adviser may be enough. The ET3 response is the point where representation earns its money, because it sets out the case you are stuck with and a poorly drafted response is difficult to unpick later. Check whether you already have cover: many business insurance policies include legal expenses insurance for employment disputes, often with a condition that you take the insurer's advice before dismissing anyone. Read that condition before you dismiss, not after.
Will the employee have to pay my costs if they lose?
Almost never. Employment tribunals are broadly costs-neutral, meaning each side pays its own legal costs whatever the outcome. A costs order can only be made in limited circumstances, essentially where a party has acted vexatiously, abusively, disruptively or otherwise unreasonably, or has pursued a claim with no reasonable prospect of success. Such orders are rare and the amounts are usually modest. Budget on the basis that winning still costs you your own legal fees and management time, because that is the realistic outcome even in a successful defence.
Can we still settle once a claim has been issued?
Yes, and most cases do settle at some point before the hearing. Acas conciliation remains available throughout the life of the claim, and a settlement reached through the conciliator is recorded in a binding COT3. Alternatively the parties can sign a settlement agreement, which requires the employee to take independent legal advice, usually with the employer contributing to that cost. Settlements can include confidentiality and an agreed reference. The price generally rises the closer you get to the hearing, because by then both sides have spent most of the legal budget anyway.
