Glossary of legal terms

  1. ACAS
  2. Compromise Agreement
  3. Constructive Dismissal
  4. Corporate Transactions – Share Sales
  5. COT3
  6. Covenants
  7. Discrimination
  8. Ex Gratia
  9. FSA / FCA
  10. Garden Leave
  11. Holiday Entitlement
  12. Implied Terms
  13. Periods of Notice


The arbitration and conciliation service. It is free and can be used to settle claims either before they’re issued or once they’ve been lodged with the Tribunal, resulting in the parties entering a COT3 settlement document. ACAS also publish the Codes of Practice that are taken into account by Tribunals when considering (for instance) whether a dismissal is unfair.

Compromise Agreement

A document drawn up which reflects terms agreed between employer and employee, usually when the employee leaves, and which prevents the employee from bringing claims against the employer. The convention is that in return, the employer pays a sum of money to the employee, and contributes to the employee’s legal fees (although there’s no obligation to). Until they’re signed, negotiations for compromise agreements are “Without Prejudice” (see Without Prejudice).

Constructive Dismissal

Sometimes an employer can treat an employee in such a way that the employment relationship breaks down so although they don’t use the immortal words “You’re fired”, the employee has no choice but to leave. Often results from a breakdown in trust and confidence after a course of bullying, sometimes with the employee going on sick leave. The employee responds to the employer’s actions by resigning. It’s important that the employee doesn’t delay or they may be deemed to have waived the breach.

Corporate Transactions – Share Sales

When control of a company is acquired by way of a share sale, any protection for employees is governed by what’s in their employment contract, and not by statute (TUPE).


The ACAS settlement document, which sets out the terms the parties have agreed rather than fighting their claim in the Employment Tribunal.


Restrictions governing the employee’s behaviour (during and) after employment. Generally need to be expressly set out in the contract in order to be enforceable. Also see Restrictive Covenants.


Treating someone less favourably. It’s unlawful to discriminate against an employee (or candidate) under any of the following protected characteristics:

  • Race, colour, nationality or ethnic origin
  • Sex
  • Disability (the employee’s or a dependant’s)
  • Sexual orientation
  • Religion or belief (or lack of belief)
  • Age
  • Gender reassignment
  • Marriage and civil partnership
  • Pregnancy and maternity

Discrimination can include things like picking on an employee for supporting someone else in a claim (victimisation), operating practices that mean it’s harder for some groups of employees to comply than others (indirect discrimination), ignoring or, at the other end of the scale, pestering someone or making them the butt of all the office jokes so that a hostile working environment is created (bullying/harassment). Claims can be against a company AND sometimes the individuals themselves.

Employees don’t need to leave (or ever have worked for the Company) to be able to bring a claim for discrimination, and compensation will include an amount for injury to feelings, so claims can prove expensive. If an employer has a robust policy that is made known to the employees and properly enforced, there may be a complete defence to any claims, so, employers ­ when did you last review what you do about diversity and inclusion in the workplace? What about training?

Ex Gratia

Literally “from kindness” – used to describe something done without any legal obligation. In the employment law context, most often used in a Compromise Agreement to describe a non-contractual sum paid by the employer on termination, the first £30,000 of which is usually tax-free.


Financial Services Authority / Financial Conduct Authority. A statutory body that, in part, provides the principles and regulations those companies within the financial services sector are obliged to comply with and procures that their employees do likewise. This has a significant impact on employees within the financial services sector and adds an additional layer of terms to their employment. This body sits alongside the Prudential Regulation Authority (PRA).

Garden Leave

The period of time when an employee is serving notice but the employer wants them not to come in to work. Usually the employer will continue to pay the employee, in return for which the employee will make themselves available but not generally attend the office or carry out any work. Literally, this is a period of leave that could be spent working in the garden. It can be an effective way of both isolating an employee and protecting a business.

Holiday Entitlement

Since 1998, employees have had the right to paid annual leave, the minimum now being 28 days a year. As the law in this area comes from European Health and Safety law, it has to be observed, so employees can’t opt out and agree to less paid leave.

Implied Terms

Not every term in an employment contract will be express or in writing, even assuming you have a written contract. Terms can be implied, for instance, through statute or through custom and practice. So you will never see a term in a contract that says men and women will receive equal pay for equal work, but it will be there by virtue of the Equal Pay Act, ­or that there is a mutual duty of trust and confidence between employer and employee ­but that will be there too (see Constructive Dismissal).

Periods of Notice

Can be set out in the contract of employment or, if the employee doesn’t have one, minimum notice periods are implied by statute  The legal minimum periods of notice from employer to employee are:

  • Between one month and two years’ continuous service ­ one week’s notice
  • Two years’ service plus – a week’s notice for each complete year of service, up to a maximum of 12 weeks’ notice after 12 years’ service.

For the employee, the legal minimum is a week’s notice after one month’s service, and there it stays, unless the contract says more.

This publication is intended for general summary guidance. It is not and should not be considered legal advice. Specific advice should be sought for specific cases; we cannot be held responsible for any action (or decision not to take action) made in reliance upon the content of this publication.