From 1 October 2026, most claims to the Employment Tribunal in England, Wales and Scotland can be brought within six months less one day, not three. For anyone negotiating a settlement agreement, that single change moves the goalposts. Employers lose the comfort of a short exposure window, departing employees gain time to weigh an offer, and advisers must check which clock applies before a figure goes on the table. Written for employers and employees in England and Wales, this guide explains how the new tribunal time limit works and what the compromise document now has to say to close off claims properly.
How the six-month tribunal time limit works
The change comes from section 152 of, and Schedule 12 to, the Employment Rights Act 2025, which substitute six months for three across the main limitation provisions, including unfair dismissal under section 111 of the Employment Rights Act 1996 and discrimination under section 123 of the Equality Act 2010. The detail sits in The Employment Tribunal (Extension of Time Limits) (Miscellaneous Amendments and Transitional Provisions) Regulations 2026 (SI 2026/758), in force on 1 October 2026, while a separate Order moves tribunal breach of contract claims in England and Wales to six months on the same date.
The transitional rule is what matters in practice. The new limit applies only where the relevant date falls on or after 1 October 2026, usually the act complained of or the effective date of termination. Where a claim concerns a series of acts, the last act decides. A dismissal taking effect on 15 September 2026 keeps the old limit, which expires on 14 December 2026. One taking effect on 5 October 2026 runs to 4 April 2027. Early conciliation then adds time: the claimant must notify Acas within the limit, and the clock pauses during conciliation, which can last up to twelve weeks for notifications made since 1 December 2025. An employer can realistically face a claim nine months or more after the event.
Acas sets out the rule in its guidance on employment tribunal time limits and the October 2026 changes. Tribunal breach of contract claims in Scotland follow on 9 November 2026. Northern Ireland has its own legislation, the Employment Rights (Northern Ireland) Order 1996, and this reform does not apply there.
What a settlement agreement does, and what it cannot do
A settlement agreement is a binding contract under which an employee gives up specified claims in exchange for agreed terms, usually a payment, an agreed reference and a clean exit date. Statutory employment rights normally cannot be signed away, because section 203(1) ERA 1996 voids any attempt to exclude them. The exception in section 203(3) works only if the agreement is in writing, relates to particular complaints or proceedings, and the employee has received advice on its terms and effect from a named relevant independent adviser covered by professional indemnity insurance. The agreement must also state that these conditions are met. Section 147 of the Equality Act 2010 runs a parallel regime for discrimination. The alternative is a COT3, recorded through an Acas conciliator, which needs no independent legal advice.
The talks themselves are often protected. Section 111A ERA 1996 makes pre-termination negotiations inadmissible in ordinary unfair dismissal claims, but the protection does not reach automatically unfair dismissal, discrimination, whistleblowing or breach of contract claims, and the tribunal can lift it where there has been improper behaviour.
None of that changed on 1 October 2026. What changed is the value of the waiver. The longer the window for bringing claims, the more a signed release is worth to the employer, and the more leverage the employee holds.
Two clocks during the transition
For exits in the months either side of 1 October 2026, advisers will work with two regimes at once. Take an employee who raised a grievance in August 2026 alleging disability discrimination, was refused a reasonable adjustment in September and is dismissed in November. The dismissal falls under the six-month rule. The earlier acts, taken alone, would sit under the old limit, but if the employee frames them as conduct extending over a period ending after 1 October 2026, the last act pulls the series into the new regime. Never assume a pre-October complaint is time-barred just because three months have passed. The way that grievance was handled will be scrutinised too, a point developed in our guide to grievance procedures under the Employment Rights Act 2025.
The same audit exposes a drafting trap. An agreement signed in mid-November for an exit on 31 December 2026 compromises the claims it describes, and tribunals read waivers of claims that have not yet arisen narrowly. The usual answer is a short re-affirmation letter, signed by the employee and re-certified by the adviser on or after the termination date, with part of the payment conditional on it. Under a six-month limit a claim arising in those final weeks stays live into the following summer, so few advisers now skip this step.
How the longer window shifts negotiation
Under the three-month rule, time pressure sat on the departing employee, who often signed before finding new work or taking proper advice. Six months changes that. An employee can start a new job and still bring a claim, which makes a low opening offer easier to refuse. The Acas Code of Practice on Settlement Agreements recommends a minimum of ten calendar days to consider written terms, and undue pressure counts as improper behaviour that can cost the employer the protection of section 111A.
For employers the logic runs the other way. A modest extra sum for certainty often beats months of exposure on a discrimination claim with uncapped compensation. The picture tightens again on 1 January 2027, when the qualifying period for ordinary unfair dismissal is scheduled to fall to six months and the cap on the compensatory award is due to go. A dismissal letter setting out a fair reason under section 98 remains the first line of defence, but contested exits will lean harder on settlement.
Drafting the waiver for a longer exposure window
The Court of Appeal in Hinton v University of East London [2005] EWCA Civ 532 confirmed that the claims being compromised must be identified, at least by generic description, so a sweeping reference to "all statutory claims" risks leaving complaints open. List the claims actually raised, then the realistic categories arising from the facts (unfair dismissal, discrimination on a named protected characteristic, unlawful deductions, holiday pay, whistleblowing detriment), backed by an employee warranty that no other claim is known of. With six months in play that warranty deserves more attention, since the employee has longer to discover or frame something new.
Carve-outs follow. Accrued pension rights and personal injury claims unknown at signing are normally excluded, and section 43J ERA 1996 voids any term that stops a worker making a protected disclosure, so a confidentiality clause that tries to silence whistleblowing will not hold. Post-employment notice pay under section 402D of the Income Tax (Earnings and Pensions) Act 2003 is taxed as earnings whatever the label, and only a genuine termination payment benefits from the statutory exemption. Where the exit involves post-termination restrictions, the agreement can reaffirm them in terms a court would enforce, as our analysis of how Tillman shapes restrictive covenants in England and Wales explains.
Preparing a settlement agreement on Captain.Legal
The settlement agreement template built on section 203 ERA 1996 follows the order in which a solicitor reviews an exit. You first select the jurisdiction, so the statutory references match Great Britain or Northern Ireland, then enter the parties, the employment dates, the agreed termination date and whether the exit is by resignation, dismissal or mutual agreement. The financial stage separates contractual sums and post-employment notice pay from the compensatory element, so the tax treatment follows each head.
Next you build the schedule of waived claims by selecting the rights in play, and the template drafts the waiver with the standard carve-outs. The adviser section records the name, firm and insurance details needed for the section 203 certificate. The document leaves room for the ten-day consideration period and downloads in Word for negotiation and PDF for signature. Where signature will come before the termination date, agree the re-affirmation wording with the employee's adviser before the draft goes out.
Common mistakes after the reform
The first mistake is treating the three-month rule as a safety net for anything that happens after 1 October 2026. Employers who delay an offer, expecting the claim to lapse by Christmas, will find the employee still has months to act. The second is signing weeks before the termination date with nothing to cover the final period of employment. The third, on the employee side, is assuming that a grievance or an ongoing negotiation stops the clock. It does not. Only notifying Acas within the limit pauses it.
The fourth is the generic waiver copied from an old precedent that names no claims. The fifth is bolting a commercial mutual or one-way non-disclosure agreement onto an exit instead of drafting confidentiality inside the settlement. A commercial NDA protects business information, but it cannot meet section 203 or override the protected disclosure rules. In an exit, the settlement agreement is the only document that can close off statutory claims, so confidentiality belongs inside it.
Frequently asked questions
What is the employment tribunal time limit from 1 October 2026?
For most claims, the tribunal time limit is six months less one day from the relevant date, usually the act complained of or the effective date of termination. The change comes from the Employment Rights Act 2025 and SI 2026/758, and it applies only where that date falls on or after 1 October 2026. Earlier events keep the three-month limit. The claimant must still notify Acas within the limit, and early conciliation then pauses the clock.
Is a settlement agreement legally binding in England and Wales?
Yes, provided it meets the statutory conditions. Under section 203(3) ERA 1996 it must be in writing, relate to particular complaints, name a relevant independent adviser who has advised the employee on its terms and effect, confirm that adviser's insurance, and state that the conditions are satisfied. Section 147 of the Equality Act 2010 applies the same framework to discrimination claims. If a condition is missing, the waiver of statutory claims is void and the employee can still go to the tribunal, which means the employer may have paid for a release that does not bind anyone.
Does the six-month limit apply if I was dismissed before 1 October 2026?
Generally not. If your effective date of termination fell before 1 October 2026, the old limit of three months less one day applies to the unfair dismissal claim, whenever you file. The exception is a claim about conduct extending over a period, such as a series of discriminatory acts, where the last act took place on or after 1 October 2026. The six-month limit can then cover the whole series. Because the answer turns on the facts, check the dates with an adviser and notify Acas early rather than counting on the longer period.
Does negotiating a settlement agreement stop the tribunal clock?
No. Negotiations, without prejudice meetings, grievances and appeals all run alongside the limitation period without pausing it. The only step that stops the clock is notifying Acas for early conciliation within the time limit. The pause lasts while conciliation runs, and the claimant then has at least one month after the certificate is issued to present the claim. An employee close to the deadline should notify Acas first and keep negotiating in parallel.
Can I download a settlement agreement template in Word or PDF?
Yes. The settlement agreement for England and Wales with adviser certificate is generated in both formats once the questionnaire is complete. The Word version lets the employee's adviser propose tracked changes, which is how most negotiations run, and the PDF gives a clean copy for signature. The document includes the section 203 wording, the schedule of waived claims with its carve-outs, the split between notice pay and compensation, and the adviser certificate.
How long should an employee get to consider a settlement agreement?
The Acas Code of Practice on Settlement Agreements recommends at least ten calendar days to consider the written terms and take advice, unless both sides agree otherwise. A shorter deadline is not unlawful in itself, but rushing the employee can amount to improper behaviour, and the tribunal may then admit the pre-termination negotiations in a later unfair dismissal claim. With a six-month claim window, employers gain little from forcing speed. A reasonable deadline, a contribution toward the adviser's fees and a clear written offer usually close the deal faster.