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It has long been established that there are three principle requirements for a
valid and enforceable compromise agreement:
1. It must be in writing;
2. It must be specific in relation to the claims it intends to compromise;
3. The employee must have received independent legal advice.
Recently, the Court of Appeal, in the case of Hinton v University of East
London, took it upon themselves to reiterate the importance of these
requirements. Specifically the court addressed the interpretation of the
requirement for an agreement to be specific on the claims being compromised.
The case of Hinton concerned a lecturer, H, who took voluntary redundancy and
signed a compromise agreement. This agreement purported to compromise all
claims H may have had against the University, his employer. The agreement
stated that it was made, ‘in full and final satisfaction of all claims in all
jurisdictions (whether arising under statute, common law or otherwise) which
the employee has or may have against the University, its officers or employees
arising out of or in connection with his employment with the University, the
termination of his employment or otherwise’. The agreement then specified 11
statutory complaints that H had compromised but did not include claims under
section 47B Employment Rights Act 1996 (ERA), concerning the protection of
employees who make protected disclosures (‘whistleblowing’). This is despite
the fact that prior to the termination of his employment H had made several
complaints that he had suffered a detriment as a result of making protected
disclosures.
H then brought a claim for ‘whistleblowing’ under section 47B ERA and the
University sought to defend this claim on the basis that it had been
compromised. The preliminary question before the Tribunal was whether the
compromise agreement, purporting to be in full and final settlement of any
claim H may have, barred him from bringing a claim. The Tribunal had to examine
whether the agreement could be said to relate to the ‘whistleblowing’ claim
despite not expressly referring to it.
The Court of Appeal, in considering the requirements of a compromise agreement,
concluded that a compromise agreement must identify the proceedings to which it
relates either by a generic description, or by reference to the section of the
statute giving rise to the claim. The court held that the agreement in this
case did not expressly refer to claims under section 47B ERA and therefore H
was not barred from bringing such proceedings.
The guidance that comes from this case and the decision of the Court of Appeal
is that particular consideration should be given to which claims an employee
could potentially bring and express reference should be made to these in the
agreement. Therefore good practice rules for the drafting of compromise
agreements now dictate that employers should avoid using standard form
agreements that refer to every conceivable employment right irrespective of
whether it is relevant to the particular circumstances of the case. It is no
longer sufficient to use a standard worded compromise agreement which simply
purports to be in, ‘full and final settlement’. Agreements should be tailored
to the individual employee and address specific claims.
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