THE FACTS
As we reported here, Mr Arvunescu was employed by Quick Release (Automotive) Ltd and his employment was terminated in 2014. He claimed in the employment tribunal that he had suffered race discrimination. In March 2018, Mr Arvunescu and Quick Release signed a COT3, settling the claim. The COT3 wording stated that the payment was 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. 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 issued a new claim against Quick Release relating to allegations that, in early 2018 (before the COT3 had been signed), he had been rejected for a job by a German company which was a wholly owned subsidiary of Quick Release, and that Quick Release had knowingly helped that company to victimise Mr Arvunescu because he had brought a claim of race discrimination against Quick Release. Both the employment tribunal and the EAT (when Mr Arvunescu appealed) held that he could not bring this claim because it had been compromised by the COT3.
Mr Arvunescu appealed to the Court of Appeal, which also dismissed his appeal.
The Court of Appeal considered that the new claim clearly fell within the scope of the COT3 drafting. Although the claim did not arise directly or indirectly "out of" the employment, it did arise indirectly "in connection with" Mr Arvunescu's employment with Quick Release. A necessary part of the claim would involve considering whether the reason for Mr Arvunescu's rejection was because he had brought proceedings against his former employer on the termination of employment. The current claim was therefore indirectly connected to or linked with the previous employment. The Court of Appeal did not consider there was any ambiguity in the wording "arising indirectly in connection with employment", even if it may be difficult to interpret or apply in particular circumstances. That conclusion was reinforced by the context in which the settlement agreement was made and the purpose of the COT3, which was to settle all claims existing at the date of the COT3, which included the new claim against Quick Release (Automotive) Ltd.
WHAT DOES THIS MEAN FOR EMPLOYERS?
The courts’ decisions hinged on the wording of the COT3 Agreement. Employers and their advisors should ensure that wording in their COT3 agreements are unambiguous and specifically refer to the settlement of future claims, claims which are not known at the date of the agreement, indirect and direct claims, and claims arising in connection with the individual’s employment. It is much harder to settle future claims in a settlement agreement because of the statutory language requiring an employee to waive a “particular complaint” in such an agreement. For more on about this please see our November alert here.
