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Settlement Agreement held not to waive employee’s right to take a claim

The Labour Court Overturned The Adjudication Officer’s Decision And Awarded The Employee €50,000, For Unfair Dismissal.

Facts: This is an appeal by Wasim Haskiya (Appellant) regarding a dispute with Keelings Retail UC (Respondent) against the decision of the Adjudication Officer (“AO”) under Unfair Dismissals Act, 1977 (“Act”).

The Appellant was employed with the Respondent from February 2015 to 18th August 2017, when his employment was terminated by reason of redundancy. The Appellant filed a complaint with Workplace Relations Commissions (“WRC”) that he was discriminated on the basis of his Religion, Age and Race and that he was unfairly dismissed. The Respondent argued that subsequent to negotiations, the Appellant was provided with a Settlement Agreement (Agreement) detailing amounts payable and was encouraged to obtain legal advice before signing it. As both the Appellant and the Respondent had already signed the Settlement Agreement, under which the Appellant waived his rights under the Act, the WRC held that the complaint was not well-founded.  

Issue: The Respondent at the hearing of the Labour Court (Court) advised that the only matter in contest before the Court was that the Court lacked jurisdiction in the matter by virtue of terms of the Settlement Agreement. The Appellant relied on Section 13 of the Act in asserting that the Agreement signed by both parties could not result in forfeiture of his statutory rights.

The Court referred to Sunday Newspapers Limited v Kinsella and Bradley FTD6/2006 [2006] ELR 227, and noted that free and informed consent to any ‘waiver’ is one of the key considerations that differentiates a genuine bargain to settle dispute and an attempt to exclude or limit the Act. The Court further pointed out that the decision emphasized that the employer should ensure that the worker is ‘capable of giving an informed consent’.

The Court held that the Agreement signed by the parties did not emerge from meaningful negotiations and hence must be construed against the Respondent. During the hearing the witness for the Respondent could not recall whether he had advised the Appellant to seek legal advice during the meeting of 15th August. It was noted that the Respondent made no further efforts on 17th August to confirm Appellant’s position on whether or not he sought legal advice before he signed the document. The Court also noted that the neither the Appellant nor the witness could recall if the Agreement signed on the 17th August was  supplied to the Appellant on the 15th August and that the Appellant’s first language was not English. The Appellant gave evidence regarding his shock of being informed at a meeting on 15th August of the intended termination and his family’s economic status. The Court concluded that based on the above, it was evident that the Appellant did not have an adequate opportunity to consider the document he signed and that there was no basis to conclude that the Appellant’s consent was free and informed  with full knowledge of his legal rights.  The Court held that the Appellant was unfairly dismissed as the Respondent put forward no defence other than relying on the Agreement.

Decision: The Appellant’s annual salary before he was dismissed was €55,000. He secured a new role in October 2017 but at a loss of approximately €25,000 per annum. The Appellant secured employment at a higher rate of pay in October 2019. The Court took into account that the Appellant’s efforts to mitigate his losses and the fact that he declined three offers of employment at a higher salary before October 2019 and awarded a compensation of €50,000. As the Appellant was paid an ex-gratia amount of €20,000 as part of the Agreement, the Court confirmed that the Respondent should pay the amount of €30,000 to the Appellant.

Link https://www.workplacerelations.ie/en/cases/2020/august/udd2023.html

Takeaway for the Employers: This decision is particularly important at this point in time, where many employers are considering negotiating exit deals with their employees. It is vital for an employer to be able to prove:

  1. it advised the employee to get legal advice before signing the agreement;
  2. it gave the employee sufficient time to obtain such legal advice and/or review the agreement;
  3. enquire whether or not the employee received legal advice and get confirmation of the name and address of the solicitor or union representative;
  4. if the employee does not get legal advice, that he/she fully understands the implication of the agreement and what the terms mean before signing it and keep a record of who explained the terms to the employee.

Interestingly, in a very recent similar case before the Labour Court, where an employer and employee had signed a settlement agreement and the employee had brought a claim under the Unfair Dismissals Acts, 1977-2015 (“UD Act”), the Court had to determine whether it had the jurisdiction to hear the complaints. The Court noted that the employee was professionally represented by a long standing and respected trade union official and that she was made fully aware of the contents of the agreement before it was signed. The Court found that the employee’s claims under the UD Act were precluded by the terms of the agreement and hence the Court did not have jurisdiction in relation to the appeals.

Authors – Anne O’Connell & Chaitra Girish Mallya

25th September 2020

Anne O’Connell Solicitors

19-22 Lower Baggot Street, Dublin 2

www.aocsolicitors.ie

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