Most claims settle before they come to a hearing. Settlement avoids the stress, inconvenience and expense of a hearing and achieves the object of a payment to the claimant. Settlements can be made at any stage of the proceedings, even up to the door of the tribunal courtroom. Much has been written about the skills of negotiating a deal. In fact, there is no magic to this. The overall aim is to get as high a payment as possible. Perhaps decide on a minimum acceptable amount and double it as an opening offer. There can then be further negotiations until a deal is reached. It should be noted that a counter-offer by either side will normally cancel any previous offers. It is worth remembering that if the employer has started negotiations, even with a derisory offer, then the employer wants to do a deal to close the case down. Negotiations can be stressful but are often exciting and can be very satisfying if a decent deal is done.
There are two basic ways in which a formal, binding settlement can be made:
By a formal agreement between the parties, normally in the form of a downloaded template. The claimant must be advised by an independent legal adviser before signing the form. This advice is normally paid for by the employer.
By a COT3 form authorised by ACAS.
The standard form of a settlement agreement essentially binds a claimant to sign away most, if not all, employment rights, in return for a cash payment. There are strict legal requirements for the contents of settlement agreements. The agreement normally contains a non-disclosure clause. It is important to be aware that the agreement is, in law, a binding contract. If either side fails to keep to the terms of the deal, civil court proceedings may follow.
Scope of COT3
Department of Work and Pensions v Brindley (2017). B complained of disability discrimination on the basis that her employer had refused to allocate her a parking space after a reorganisation, and this had worsened her disability. In April 2014 she was issued with a final warning for sickness absence and in November 2014 another for attendance. In December 2014 B signed a COT3 form which settled her claim and all other relevant claims arising from the facts of the proceedings up to and including the date of the COT3.
B then brought another claim arguing that, by giving her another final written warning in November 2014, the employer had again discriminated against her by reason of her disability. The employer argued that this fresh claim was barred by the COT3.
The ET found that the fresh claim could proceed. The new circumstances referred to in the claim were not part of the COT3 settlement. The fresh claim was a separate claim about a different warning in a different time frame.
The employer appealed to the EAT.
The appeal was dismissed.The COT3 agreement only covered the specific factual matrix of the proceedings of the original claim and not a later one, even if the facts were similar.
Breach of conditions of agreement
Pertemps Medical Group Ltd v Ladak (2020). L was employed by P as its CEO. When his employment was terminated he entered into a settlement agreement which included a clause stating that he would not make adverse or derogatory comments about P and would not do anything to bring it into disrepute. P alleged that L was in breach of this agreement. It obtained an interim injunction preventing L from acting in breach of the agreement. L argued that he had made protected disclosures and had acted as a whistleblower. P alleged that L had been in breach of the injunction.
The High Court ruled that, on the evidence, it was likely that P would succeed in establishing a breach of the settlement agreement.
P was entitled to an injunction.
Power to set aside
Glasgow City Council v Dahhan (2016). D’s claims of race discrimination were settled before they were heard. The claims were dismissed. D then informed the ET that he had lacked capacity to instruct his solicitor and to make decisions at the time the settlement was agreed. He asked for the ET judgment to be reconsidered. The ET set the judgment aside. The employer appealed to the EAT.
The appeal was dismissed.
Tribunals have the power to ensure that purported settlement agreements are valid. They can set aside agreements involving an absence of consent by one of the parties because of misrepresentation, economic duress or mistake.
This power includes the power to set aside an agreement on the ground of invalidity if one of the parties did not have the requisite capacity to enter into it at the time of signing.
Withdrawal of claim
When a settlement is achieved, the claim must be formally withdrawn. But note the following case:
Paul v Virgin Care Ltd (2019). Ms P was dismissed for misconduct. She brought a number of claims in the ET, including automatically unfair dismissal. She represented herself at a hearing because she could not afford legal representation. She withdrew the automatically unfair dismissal claim and the tribunal made an order dismissing that claim. She appealed to the EAT, arguing that the ET had failed to take care to ensure that she had a free and informed choice when she withdrew the claim and had exerted undue pressure on her.
The appeal was dismissed. The EAT stated that the withdrawal of the claim had been clear, unambiguous and unequivocal.
The ET had acted properly with a view to clarifying and understanding the way in which Ms P was putting her case. Ms P had been given the opportunity to consider whether or not to withdraw that part of her claim. No unfair pressure had been put on her.
Withdrawal of claim: medical evidence
Campbell v OCS Group UK Ltd and another (2017). C, a claimant in person, withdrew her claim on the first day of an ET hearing on medical advice. The ET dismissed the claim. Two days later C asked the judge to reconsider the decision to dismiss. The judge ruled that there was no reasonable prospect of the tribunal revoking its judgment. C appealed to the EAT.
The appeal was allowed.C had produced medical evidence showing that she was under stress and unwell. She withdrew on medical advice and not on the merits of the claim. Within a very short time she had second thoughts. It might be that if she had been legally represented she would have applied to adjourn.
Withdrawal of claim: properly considered decision
Drysdale v Department of Transport (2014). D complained of unfair dismissal. He was represented at the ET by his wife. She became upset when she was told that the case would be postponed as part-heard. She made an oral application to withdraw the claim. The respondent’s representative made an oral application for the claim to be dismissed. This was granted and an order was made for D to contribute to the respondent’s costs. D appealed to the EAT which dismissed the appeal. D then appealed to the Court of Appeal.
The appeal was dismissed.
The ET had not failed to take adequate steps to ensure that D had taken a properly considered decision to withdraw his claim.
The ET did not have a duty to enquire into the health of D’s representative. She had authority to withdraw the claim and the ET was entitled to determine the question of dismissal without a written application.
The determination of the appropriate level of assistance or intervention in relation to litigants is a matter for the judgment of the tribunal.