COT3 settlement agreements: be clear about which claims are being settled7th March 2022 • 2 min read • Chris McAvoy
The fairly recent decision of the Employment Appeal Tribunal (“EAT”) in the case of Arvunescu v Quick Release (Automotive) Ltd highlights the importance of ensuring you know what claims are being waived within COT3 agreements (a form of legally binding agreement used by Acas to settle actual or potential Employment Tribunal (“ET”) claims).
What was the case about?
The case concerned an employee who brought a race discrimination claim against his former employer. The claim was ultimately settled under a COT3 which contained widely drafted terms as to what was being compromised, with reference to, ‘any claim arising directly or indirectly out of or in connection with’ the terminated employment.
The employee later applied for a job with a subsidiary of the former employer and, after being rejected for the role, brought a victimisation claim. Essentially, the employee believed they were rejected for the role because of their previous discrimination claim. If the employee was correct, there is a high chance that this would have amounted to victimisation, entitling the employee to potentially significant compensation for lost earnings as well as injury to feelings.
Struck out by the ET
The claim was struck out by the ET, in part because of the above mentioned term in the COT3. Following an appeal to the EAT, the EAT agreed that there was a link, albeit possibly indirectly, between the claim being pursued and the terminated employment meaning that the claim was waived by the COT3. Consequently, the employee could not pursue the claim any further.
Know the provisions of your Settlement Agreement
If you’re an employee negotiating a settlement agreement, it is important for you to be aware of the extent of these broad provisions and the impact they may have on your ability to pursue other claims. As they are often looking for finality in litigation, the employer may not be willing to negotiate this but knowing the impact of the provision will assist you in deciding whether you wish to accept the settlement, or not.
The drafting of this COT3 was obviously beneficial for the former employer. It was wide-reaching and intended to encompass all eventualities. Had the former employer incorporated only basic or narrow provisions into the COT3, they may have found themselves in the unfortunate position of having to defend (or settle) additional claims against the same former employee.
People Legal can help with Settlement Agreements
If you are either an employee or employer seeking advice on a COT3, or other settlement agreement, please get in touch with us here at People Legal. We are trained and experienced in handling all matters of employment law and can provide you with the information you need.
Call us on 0800 368 8470 or arrange a chat at www.people.legal/contact for free initial advice.
Please note the information contained in this briefing is intended as a general review of the subject featured and is not a substitute for obtaining specific legal advice.