Settlement of a future claim
9 December 2022
Last month, we reviewed a case in which the Employment Appeal Tribunal considered the scope for settling future tribunal claims under the terms of a settlement agreement. The Court of Appeal has since handed down a decision dealing with the ambit of a COT3 settlement to settle a future claim.
Facts of the case
The claimant, Mr Arvunescu, was employed for a short period during 2014. After his employment was terminated, he brought a race discrimination claim against his employer (QRA). The claim was eventually settled in March 2018, under the terms of a COT3 agreement concluded via Acas. The COT3 included broadly-drafted wording to settle all claims that Mr Arvunescu “has or may have” against the company “arising directly or indirectly out of or in connection with” his employment.
After he had signed the COT3, Mr Arvunescu brought a further claim against QRA. He alleged that he had been victimised as a result of his previous race discrimination claim because he had been rejected for a job with a subsidiary of GRA in February 2018, before he had signed the COT3.
An employment tribunal held that the victimisation claim came within the scope of the COT3 and so had been settled. This decision was upheld on appeal to the EAT. Mr Arvunescu appealed to the Court of Appeal.
Court of Appeal decision
The Court of Appeal has upheld the finding of the employment tribunal that the victimisation claim had been settled under the terms of the COT3. The claim was one that had arisen, indirectly, “in connection with” his employment. The COT3 purported to settle all claims that existed at the date of the agreement, 1 March 2018, whether or not they were known about at that date. The victimisation claim related to events in January or February 2018, so it existed at the date of the agreement. Mr Arvunescu’s claim was therefore dismissed.
The Birketts view
This decision helps to clarify that potential employment claims, based on facts in existence at the time a claim is settled, can be settled under the terms of a COT3 (or a settlement agreement) provided it is drafted broadly enough.
The key difference between this and the previous EAT decision is that in the earlier case, the facts giving rise to the claim had not yet arisen at the time the settlement agreement had been signed. It was therefore not possible for the claim to be settled, since a settlement agreement cannot be used to settle a claim that may or may not occur at some point in the future. A COT3 would similarly not be capable of settling such a claim.
The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at December 2022.