18th January 2017

I've settled all my lawsuits...Or have I?

A word of caution about the wording of settlement agreements can be taken from the recent case of DWP v Brindley.  All too often, parties to an employment tribunal claim will expend a significant amount of time and effort during any negotiations surrounding the case.  If settlement is ultimately agreed, parties can breathe a deep sigh of relief knowing that they avoid the uncertain and costly realm of the employment tribunal.  However, in that moment of relief when settlement is verbally agreed, it is important to keep an eye on the ball when documenting the settlement terms.  Think about the settlement wording and the issues which the employer is seeking to cover within the settlement.

Usually, any employment tribunal settled with the assistance of ACAS will require a COT3 (a form of settlement agreement) to be issued.  This will be drafted and adjusted by the parties and then ultimately issued by ACAS in a final form for signature.

In Brindley, this is exactly what happened.  The claimant’s case was settled by COT3 Agreement.  The COT3 was drafted and signed.  The case alleged discrimination due to an absence related final written warning.  Shortly before the COT3 was signed, the claimant employee (who was still employed by the employer against whom the claim was brought) was given a second final written warning concerning absence.  The claimant raised a further tribunal claim arising out of the second final written warning which was given before the COT3 was signed to settle the first tribunal claim.  The employer sought to have the second claim struck out on the basis that it was covered by the terms of the COT3.

The Employment Appeal Tribunal disagreed and allowed the claimant to proceed with the second claim.  The COT3 covered all claims included within the original tribunal case along with all other relevant claims arising from the facts of the proceedings up to the date of the agreement.  The wording of the COT3 was not wide enough to cover any claims arising from the second warning which was a new circumstance.  The second warning did not form part of the “facts of the proceedings” of the first case and was thus outwith the scope of those claims covered by the settlement.  Had the settlement agreement covered “all matters arising from the claimant’s employment” up to the date of the COT3, the second claim might well have been barred.

This serves as a useful reminder to take advice when documenting any settlements and to use wording which is sufficiently wide to cover all claims arising out of employment (not just the specific circumstances of the claim which is being settled).   If in doubt, call Blackadders’ employment team.

Jack Boyle
Associate Solicitor – Employment Law

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