Employment Dispute Settlement Precludes Subsequent Victimisation Claim

The vast majority of employment cases end in compromise, thus doing away with the need for a public hearing. As a Court of Appeal ruling made plain, however, great professional care is required in drafting settlement agreements in order to ensure that they do not themselves become the focus of further dispute.

The case concerned a man whose race discrimination complaint against a company for which he worked for about a month was compromised on confidential terms. He accepted a sum of money in what was described as full and final settlement of any claim he might have against the company arising directly or indirectly out of, or in connection with, his period of employment or its termination.

About two months after the settlement was signed, he brought a further claim against the company, alleging victimisation. He contended that he had been turned down for a position with one of its subsidiaries because he had previously brought the race discrimination claim. He asserted that the company, through its close links to the subsidiary, was responsible for him not being offered the position.

Following a preliminary hearing, however, the victimisation claim was struck out by an Employment Tribunal. That ruling was subsequently upheld by the Employment Appeal Tribunal on the basis that the claim fell within the scope of the settlement agreement and had thus already been compromised.

Ruling on the man’s challenge to that outcome, the Court found that the victimisation claim did not arise directly or indirectly out of the relevant period of employment. In dismissing his appeal, however, it noted that the settlement agreement was drafted more widely than that. The victimisation claim was indirectly connected to, or linked with, his previous employment by the company and thus fell within the ambit of the agreement.

The Court was reinforced in its view by the context in which the settlement came to be reached. Its wording indicated a clear intention to settle all claims arising out of the man’s employment that might exist as at the date on which the agreement was signed, whether or not they were known about at that time. The victimisation claim related to events that pre-dated the agreement and the underlying purpose of the settlement was to compromise all such existing claims.