Employment Law Cases

Settlement agreements: claims arising in connection with employment

Arvunescu v Quick Release Automotive Ltd

An ex-employee’s victimisation claim was covered by a COT3 settlement agreement because of the precise wording used.

Background

Mr Arvunescu had worked for QRA a month before his dismissal in June 2014. He then brought a race discrimination claim but this was settled in March 2018 via a COT3 agreement. It included the following words:

‘The claimant agrees that the payment [...] is accepted in full and final settlement of all or any costs, claims, expenses or rights of action of any kind whatsoever, wheresoever and howsoever arising under common law, statute or otherwise (whether or not within the jurisdiction of the employment tribunal) which the claimant has or may have against the respondent or against any employee, agent or officer of the respondent 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 brought another claim against QRA for victimisation – alleging that they were responsible for his failure to get a job at a wholly owned subsidiary of theirs (because the subsidiary knew of his previous claim against QRA). A tribunal and the EAT held that this victimisation claim had been settled by the COT3 agreement. Mr Arvunescu appealed.

Court of Appeal decision

The appeal was dismissed.

Mr Arvunescu’s victimisation claim was clearly caught by the COT3 wording. While the claim didn’t arise directly or indirectly ‘out of’ his employment at QRA, it nevertheless arose indirectly ‘in connection with’ it.

A necessary part of Mr Arvunescu’s claim would involve considering whether the reason for refusal of the post at the subsidiary was because he had brought proceedings against his former employer. The victimisation claim was therefore indirectly connected to or linked with his previous employment. That conclusion was reinforced by the context in which the settlement agreement was made. The purpose of the COT3 agreement was to settle claims connected with Mr Arvunescu’s employment that existed as at the date of the agreement, whether or not they were known about at that date. The 2018 victimisation claim was a claim against QRA connected with Mr Arvunescu’s employment with QRA - and that existed at the date of the settlement. The purpose underlying the COT3 agreement was to settle all such existing claims.

Comment

This decision will bring some certainty and reassurance to employers seeking to settle claims via a COT3 or settlement agreement. The key is to ensure that any terms of settlement are carefully drafted so as to limit the risk of any future claims.