EAT rules that a COT3 settled a related appeal, despite not being explicitly mentioned

Background

In the case of Turner v Western Mortgage Services Ltd, the claimant brought an Employment Tribunal claim which included a complaint relating to the non-payment of benefits under a permanent health insurance (PHI) scheme. That complaint was struck out, and the claimant appealed the strike-out decision to the Employment Appeal Tribunal (EAT). The EAT considered the appeal arguable and directed that it proceed to a full hearing.

Before the appeal was heard, the parties entered into a COT3 agreement following Acas conciliation. The COT3 required the claimant to withdraw his Employment Tribunal claim and provided for payment of a settlement sum of £18,500. It included a “full and final settlement” clause covering “any and all claims” the claimant had or might have against the respondent, subject only to limited and expressly stated exclusions. The agreement did not make any explicit reference to the ongoing EAT appeal.

Following the settlement, the Employment Tribunal dismissed the claim on withdrawal. Neither party initially notified the EAT of the COT3, and directions were subsequently issued for the appeal to proceed. The respondent later applied for the appeal to be dismissed on the basis that it had been settled. The claimant argued that the appeal should continue, on the basis that it was not expressly referred to in the COT3 and related to a complaint that had already been struck out.

A preliminary hearing was listed to determine whether the appeal could proceed.

Decision

The EAT dismissed the appeal.

It held that a COT3 must be interpreted objectively, applying ordinary principles of contractual interpretation. The broad “full and final settlement of any and all claims” wording, read in context and subject only to narrow express exclusions, was sufficient to compromise the complaint that had been struck out and the related appeal. If the parties had intended to exclude the appeal from the scope of the settlement, the agreement would have needed to say so expressly.

In any event, the EAT concluded that the appeal had become academic. Once the underlying complaint and claim had been settled on a full and final basis, the appeal could not lead to the complaint being reinstated or determined. The EAT reiterated that it will not generally entertain appeals that are purely academic, absent a compelling reason.

Learning points for employers

Settling an Employment Tribunal claim on a full and final basis will usually bring the litigation to an end, including any appeal arising from that claim. Where the underlying complaint has been compromised, a related appeal is likely either to be treated as settled or to be rendered academic. Nevertheless clear and precise drafting is important in order to reduce the likelihood of disputes such as this arising.

Employers should also ensure that tribunals and courts are notified promptly once settlement has been reached, to avoid unnecessary procedural steps continuing.

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For more information or advice, please contact Alice Mennell in our Employment team.