Glossary of common employment law terms

There are many terms and acronyms that you may come across, both on this website, and in dealings with your employer. Some of the most common of these are explained below for your reference. If there other terms or phases related to employment law that you are having trouble understanding, please feel feel to email us at [email protected]

Common terms found in employment law

Compromise Agreement  

An agreement between an employee and employer to settle their dispute amicably and avoid legal proceedings, nowadays called a Settlement Agreement.

Constructive Dismissal

When an employer acts in a manner that the employee is entitled to resign and consider themselves unfairly dismissed. The circumstances in which this may occur are wide-ranging, from a unilateral variation of fundamental terms of the employee’s employment contract, to the employer acting in such a way of that it breaches “trust and confidence”.

Ex Gratia Payment

A sum of money paid when there was no obligation or liability to pay it. ‘Ex Gratia’ is Latin for “out of good will.”


A generic term used to describe anyone who is a Licensed Legal Practitioner qualified to give legal advice. Solicitors and Barristers are both types of Lawyer. (See also Solicitor below)

Restrictive Covenant

A clause in an employee’s contract which restricts the post-employment activities of the employee for a limited period of time.

Settlement Agreement

Successor in name to Compromise Agreement (see above) but in essence refers to the same thing. The terms are still often used interchangeably.


A type of Lawyer (see above) who’s a qualified legal professional and who works directly with clients. A solicitor deals with all the paperwork and communication between sides in order to resolve a case for a client.

If you have contacted a lawyer to handle your employment case, they will usually be a solicitor. However, if the case goes to court a solicitor may not always be able to represent you and will instruct someone with specialist qualifications – often a barrister – to speak on your behalf.


Common acronyms you might come across

ACAS – Advisory, Conciliation & Arbitration Service

COT3 A type of settlement agreement negotiated through an ACAS conciliator which is legally binding. Once a COT3 is agreed, a claimant won’t be able to make a future tribunal claim in those matters. If a tribunal claim has already been lodged, it will be closed.

DWP – The government’s Department for Work & Pensions

EDT – Effective date of termination (of employment)

ET1 – Employment tribunal claim form completed by claimant or claimant’s representative

HMCTS – Her Majesty’s Courts & Tribunals Service. A government service responsible for the administration of employment tribunals, amongst other things

PHI  Permanent Health Insurance (aka income protection insurance)

PILON – Pay In Lieu (i.e. instead) Of Notice

PIP – Performance Improvement Plan

TUPE  – Transfer of Undertakings (Protection of Employment) regulations. This is relevant to any redundancy decisions or changes in terms and conditions where a business or part of it is transferred from one owner to another.

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