Wide ACAS Settlement Wording Held to Be Effective Waiver of Future Claims
A recent Employment Appeal Tribunal decision has held that a claim brought after a COT3 settlement had been signed was covered by drafted waiver clause, which covered all future claims arising directly or indirectly out of the claimant's employment.
What Is a COT3 Agreement?
A COT3 is a type of settlement agreement used where settlement is reached through ACAS where tribunal proceedings have been brought or are threatened. It sets out the terms agreed between the parties, and is executed by either the parties or their representatives. Depending on the wording of the COT3, its scope may be limited to settling just the particular proceedings (or threatened proceedings) that have prompted the COT3 to be entered into, or, if a waiver is included, the COT3 agreement may also waive the right to bring other claims.
Wording of the Waiver
In the case of Arvunescu v Quick Release (Automotive) Ltd, a COT3 was signed in March 2018, settling claims of unfair dismissal and race discrimination brought by the claimant. The COT3 included a widely drafted clause waiving all claims 'of any kind whatsoever, wheresoever and howsoever arising… arising directly or directly out of or in connection with the claimant's employment… even though the claimant may be unaware at the date of this agreement of the circumstances which might give rise to (the claim)'.
Waiver Covered Second Dispute
Before entering into the COT3, the claimant applied for a role with the respondent's subsidiary in Germany. His application was unsuccessful and he believed the respondent had engineered his rejection because of his previous Tribunal claim. In May 2018 he brought a claim relating to this second dispute.
At a preliminary hearing the Employment Tribunal found the new claim fell within the scope of the COT3, and also found the claim had no reasonable prospects of success in any event. The claimant appealed to the EAT.
What Was the EAT Decision?
The EAT determined the tribunal had been incorrect to find the claim had no reasonable prospects of success, as it could potentially have fallen within the scope of section 112 Equality Act 2010, which applies where one person 'knowingly helps' another to carry out a discriminatory act. However, whilst the claim could have succeeded, the EAT agreed it had been compromised by the COT3 wording, and so could not proceed on that basis. The EAT held that on the facts, there was a sufficient link between the claimant's past employment and the new claim, for the new claim to be caught by the COT3 waiver.
Learning Points
Whilst this is a case based on a very specific set of factual circumstances, there are wider learning points that can be applied to employers entering into settlement agreements or COT3s. Thought should be given to how a waiver is drafted in any such agreement. Of course, the wording of any waiver will be a matter for negotiation between the parties. This case demonstrates why it might be advisable for an employer to insist on a broadly drafted waiver in order to protect the employer's position as far as possible.
For more information please contact Lorna Scully in our Employment Law team on 0121 227 3719 or complete the form below.