Settlement agreements

Legally binding settlements, in which the parties refrain from issuing or continuing proceedings, can be agreed before a case reaches a tribunal. This can happen through the services of an Advisory, Conciliation and Arbitration Service (Acas) conciliation officer, in which case the agreement will usually be put in writing on a form COT3, or through a settlement agreement reached following advice from a relevant independent advisor, such as a solicitor, a certified union official or advice worker. If an advice centre worker is providing the advice, there must have been no payment for it.

Acas has a general duty to promote good industrial relations. It provides advice and guidance on employment issues (particularly through its Codes of Practice), runs training events and provides arbitration in collective and individual disputes.

By signing a settlement agreement, the employee is barred from bringing or continuing with a claim in relation to the issues specified. Claims which may have been settled can include present and future claims if these are, or could have been, contemplated at the time of the agreement (Byrnell v BT EAT/0383/04).

However, in Hinton v University of East London ([2005] IRLR 552), the Court of Appeal said it was not enough for an agreement to refer to “all claims” in order to settle any claim the employee might have. The agreement must clearly indicate the particular proceedings it is compromising. Dr Hinton’s claim for whistleblowing was not compromised because there was no mention of public interest disclosure or description of those facts. He could therefore pursue his claim.

If a representative enters into an agreement on an individual’s behalf, that individual must have given them authority to do so. In Gloystarne & Co Ltd v Martin ([2001] IRLR 15), Mr Martin was not bound by a settlement agreement made by a union official through Acas because he had not given his consent. However, if the appropriate authority has been given, it is virtually impossible to unravel a settlement agreement (Gibb v Maidstone & Tunbridge Wells NHS Trust [2010] EWCA Civ 678).

Individuals who secure compensation under the terms of a settlement agreement would be well advised to observe any confidentiality clause — a breach of which is one of the easiest ways in which employers can avoid making payments. Also, be wary of clauses within a settlement agreement that involve an employee warranting that s/he has not breached any term of his or her employment contract:

The government wants to encourage the use of settlement agreements. It intends to specify the procedure for using them, and provide a model version available for download together with accompanying guidance.