Settlement Agreement Through ACAS - What Can Employer Sue For Once Signed?

[ISay]

Hi guys,

 

I am currently negotiating a settlement agreement through ACAS whilst the tribunal is pending. I need to know under what circumstances my previous employer can attempt to recover the money from me once the agreement is signed.

 

I ask because they have stated they will not sign away their rights (but I have to). This makes me highly suspicious about their intentions and although the ACAS conciliator assures me this is normal, I'm sure he doesn't know how often people get screwed over later once his part is done!

 

Basically, I wasn't very senior in the company so the only thing I'm worried about is that I will settle, sign away my rights and then my employer will make up some 'gross misconduct' which wouldn't be difficult to do and they've lied a lot in the past (and in the very recent!). I'm worried they will make a claim to a county court saying they wouldn't have had to pay out for my claims if they had found this earlier as they would have fired me.

 

1. Can they do this after I have signed an agreement through ACAS even though I no longer work for them? (would it have to be specified in the agreement or is it just assumed that they can / can't)

 

2. Other than what is explicitly stated in the agreement, is there anything they can recover the money for by default?

 

Basically, I don't want to settle 'quietly' then have them turn around and claim the money back knowing that I won't be able to then make my claims public.

 

Please can you provide sources for any advice offered (if possible) so that I know it's not just opinion and also so that I can study up on this more.

 

Thank you very much,

[steampowered]

The COT3 is primarily about your ET claim. The employer will only be settling its rights against you if this is stated in the agreement. I personally would push to ensure that both parties are settling any claims they might have against the other.

 

It is difficult to see how the employer could refuse to pay out once it has signed the COT3. COT3 can be enforced directly through the county courts without reference to the underlying circumstances, see http://www.acas.org.uk/index.aspx?articleid=2635. The only exception would be where the employer's agreement was procured through fraud but difficult to see how that could apply here and I'm not aware of any case law on it in the COT3 situation.

 

Of course the employer could always make up some new claim which does not rely on the COT3. Ultimately anyone can sue anyone for anything, the question is whether they will be successful when the claim is judged by the courts on its merits. It sounds very unlikely to me that the employer would start new litigation based on made-up facts.

 

You should consider your position regarding references. Generally the employer can refuse to give you a reference or give you a negative reference. It is common to agree a clause which says the employer must provide a neutral reference confirming job title and dates of employment only (ideally attaching the form of such reference as an Appendix to the agreement).

[Grotesque]

Indeed, you should ideally be negotiating a 'without prejudice' settlement, inwhich you settle all future claims against the company (e.g., your ET) and they fulfill any remaining contractual obligations (outstanding pay, references etc). 'Without prejudice' not being merely a label of a document but the actual circumstances it is agreed under (in other words, it cannot be just 'called' 'w/out prejudice', it has to demonstrate that it is). Thus, protection for 'both' sides.

Good luck!

[becky2585]

By "tribunal pending" I assume you have issued proceedings?

 

Is your employment with the company going to continue?

 

If not then as a bare minimum I would suggest adding a clause confirming they will not pursue you for legal costs. If they don't agree to that, make it clear you do not have a binding settlement without that clause.

[ISay]

Thank you to everyone for the replies.

 

I have already asked for both parties to sign away their rights (or right to any claims) but they have refused and I've been told by the ACAS conciliator (and a solicitor in the past) that this is normal and employers never agree to this so the only thing stopping me from settling now is not knowing what they can bring a claim for given that I have left the company and the settlement through ACAS is specifically to settle my claims.

 

So, assuming the ACAS terms are as follows:

 

- all of my claims are settled based on a payment of £x

 

(I left months ago having worked out my notice)

 

Q. Does my employer have a legal right to sue me for the money back through the county court under any circumstances at all and what would those be?

 

(Although I'm grateful for the help, facts only please not opinions as I need to know whether or not to settle or go through the tribunal to ensure my claims are heard if I'm not going to be compensated in the end anyway) - case studies would be ideal as I've searched the internet but can't find anything about this.

 

Thank you,

[Grotesque]

As for case studies- there do not seem to be many. Maybe 'we' are waiting for precedent to be made.

This from Steeles' Solicitors:

 

 

Compromising Future Claims – Using COT3 Agreements

 

In a recent case the Employment Appeal Tribunal has issued a reminder that clear language is required in a COT3 form (on which the agreed terms to settle a tribunal claim are recorded by ACAS conciliation officers) to compromise future employment claims.

 

Employment Principal Cheryl Edmonds comments.

 

In McLean v TLC Marketing Plc, the claimant entered into a COT3 in order to settle her claims for equal pay, sex discrimination and victimisation. Under the agreement, Ms McLean accepted the sum of £28,000:

 

“In full and final settlement of her Employment Tribunal claims against the Respondents and of any other claim whatsoever arising out of or connected with her employment with the Respondent and its termination.”

 

The company failed to pay the full amount due under the COT3 or to provide her with a reference as agreed, so Ms McLean brought a further claim of victimisation. The tribunal refused to accept her claim on the grounds that the COT3 agreement precluded any such claim.

 

On appeal, the EAT disagreed and the claim was remitted to a tribunal to be considered on its merits. The EAT held that the language used in the COT3 was not sufficiently clear to support a finding that the parties intended to exclude future claims.

 

Comment

 

Whilst it has been accepted that in principle COT3 agreements can compromise future claims, it is not yet clear what language is required in order to do so to the satisfaction of an employment tribunal. In the absence of clear wording, the agreement will be interpreted as only waiving claims in the contemplation of the parties at the date of the agreement. Where there is thought to be a risk of future claims, careful thought needs to be given to the wording of the agreement. Employers should also be mindful of the fact that if they are in breach of the terms of a COT3 agreement, employees may seek to pursue a victimisation claim rather than bringing a claim for breach of contract in the county court.

 

This seems to suggest that, on principle, an employer can renege on an Agreement, but by doing so, may leave themselves liable for a victimisation claim. Maybe that's why neither party ever / rarely does breach it.

Edited August 9, 2013 by ims21

[steampowered]

Your one question runs together two separate issues which both have a different answer.

 

The first issue is whether the employer could bring a separate claim against you in county court. The answer is yes. If your claim relates to unfair dismissal, for example, there would be nothing to stop the company from bringing a separate claim for the return of company property. If this is a matter of concern you may ask that the COT3 includes the following wording:

 

Each party agrees, on behalf of itself and on behalf of its related parties not to sue, commence, voluntarily aid in any way, prosecute or cause to be commenced or prosecuted against the other party or its related parties any action, suit or other proceeding in this jurisdiction or any other.

 

The second issue is whether the employer could try to avoid paying out under the COT3. A COT3 is a contract which provides for the payment of money. As per the link in my previous post, a COT3 gives you an automatic right to sue for the money in county court regardless of the underlying circumstances.

 

Generally speaking a COT3 is treated just like any other contract. Written contracts are final and it is very difficult to go behind the written wording - that is the whole point of having a contract. The circumstances in which a contract may be undermined include (1) fraud, (2) duress, (3) misrepresentation, (4) mistake as to a fundamental matter. A "gross misconduct" charge is not enough by itself to bring you within one of these categories.

 

In practice these issues are rare and the standard of proof required by the courts is very high, especially in the context of COT3s and Settlement Agreements. For some discussion on this see http://www.bailii.org/ew/cases/EWHC/QB/2007/1392.html, para 16 onwards.

 

There is an important point you need to understand. Including wording that the employer settles all its claims against you will not help you if the employer wants to allege one of those four items. This is because the employer would be alleging that the entire COT3 is invalid - including any clause saying that it will not bring a claim against you. In reality this is very unusual and not something to get worried about, unless there are genuine grounds for the employer to claim fraud.

[Grotesque]

You might also want to take a look at this CAG page here, dealing with similar events.

[ISay]

Hi everyone,

 

I want to say a huge thank you for taking the time to reply.

 

I have looked into this and the reason I became suspicious of my ex-employer is because of some terms they included in a previous compromise agreement. It has since been brought to my attention that the only reason those terms would have been relevant in that agreement is because the compensation was for terminating the employment as opposed to settling claims (although they did include that I couldn't sue them after leaving of course!).

 

I didn't go ahead with that for various reasons but it had been playing on my mind that they might get me to sign away my rights and then try to reclaim the money (after paying out) for whatever reason at some point in the future but the research I have done and the advice I have had confirms this would not be possible as long as the agreement is worded correctly.

 

Despite the advice to avoid 'full and final settlement' wording in the hyperlinks on these posts, it is actually better to agree to this for both parties based on case studies looked at because this protects both sides.

 

If an employer refused to agree to this and also to specify which claims were being settled in full, I would be very suspicious because this would leave them open to being sued again by the employee. I can understand why employees would want to avoid this (so that they can sue again!) but really, as long as you agree terms and are happy with the terms then you shouldn't need to.

 

I also think it would be daft for an employer to try to take further action because their case would be public and I doubt they would ever be able to settle anything out of tribunal/court again! = long term benefits over short term of simply walking away...

 

Anyway, I've had my mind put at ease and I'm grateful for the advice guys.

 

Thank you