398: Can a broad COT3 settlement agreement waive future victimisation claims?
In Arvunescu v Quick Release (Automotive) Ltd, the Court of Appeal recently considered whether an employee’s claim that his ex-employer had knowingly assisted its subsidiary company to commit an act of victimisation against him came within the scope of a COT3 settlement agreement (COT3).
After Mr Arvunescu’s employment was terminated by Quick Release (Automotive) Ltd in 2014, he brought a claim of race discrimination in the Employment Tribunal. In March 2018, this was settled by a COT3 which stated that he was to receive a payment in full and final settlement of all claims ‘of any kind whatsoever, wheresoever and howsoever arising…directly or indirectly out of or in connection with the claimant’s employment with the respondent, its termination or otherwise.’
The COT3 also stated:
‘This paragraph applies to a claim even though the claimant may be unaware at the date of this agreement of the circumstances which might give rise to it or the legal basis for such a claim.’
In May 2018, Mr Arvunescu brought a victimisation claim alleging that, prior to the COT3 being signed, Quick Release had knowingly facilitated the rejection of his job application to its wholly owned German subsidiary company by failing to progress a reference request. Both the Employment Tribunal and the Employment Appeal Tribunal (EAT) ruled that the victimisation claim could not proceed because it was covered by the COT3.
The Court of Appeal dismissed Mr Arvunescu’s appeal, ruling that the new claim clearly fell within the scope of the COT3 wording. Mr Arvunescu’s victimisation claim would necessarily involve considering whether the reason for the rejection of his job application was because he had brought race discrimination proceedings against Quick Release. Although this claim did not arise ‘out of’ his former employment, it clearly arose ‘indirectly in connection’ with it and was therefore unambiguously covered by the COT3 wording. It was also clear that the COT3 had been agreed with the purpose of settling all claims existing at that date, whether or not they were known about.
This case highlights the importance of ensuring that the wording of a COT3 agreement is clear and unambiguous, covering the settlement of future claims and claims that were unknown at the date of the agreement (to the extent legally possible). It is also important to include claims that arise ‘out of’ and are ‘directly or indirectly connected to’ the previous employment or its termination. Where possible, the influence of relations with group companies to the employer should also be considered and built into the COT3 itself.
It is important to note however, that unlike COT3 agreements, ordinary settlement agreements are unable to validly waive future unknown claims. This was confirmed in the recent Scottish EAT decision of Bathgate v Technip UK Ltd where the employee’s age discrimination claim could in principle proceed because the settlement agreement had been signed before the circumstances giving rise to the claim had arisen.
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