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In Full and Final Settlement!

Julie Austin
06/05/2020

Locations

Ireland

Employment disputes are frequently resolved through a documented financial settlement agreement.
 
No doubt there are various examples of this occurring during the current Covid-19 pandemic.
 
These can arise in a variety of situations – to settle actual or threatened employee litigation, to resolve an internal complaint or to avoid future possible claims in termination situations, including redundancy situation.
 
Whatever the reason, employers in Ireland have long known that they can draw a proverbial line in the sand and confidently settle all such matters through written settlement agreements. As such, severance / compromise / waiver agreements (call them what you will) are widely used in such situations.
 
While there is no specific statutory basis for their use, Irish courts and tribunals (nowadays we're talking about the WRC, Labour Court and sometimes the civil courts) have long recognised and enforced these arrangements. Such institutions know they are a sensible and efficient way of resolving employment difficulties, unless there is some key element missing.
 
Two relatively recent examples illustrate this.

In a WRC decision issued in January 2020 (ADJ-00020068), the Adjudicator declined jurisdiction to hear a race discrimination claim brought by a former employee who had signed a "compromise agreement", effectively stopping him from bringing such a claim. The agreement the employee had signed was stated to be in “full and final settlement, satisfaction, release and discharge of any and all claims … arising out of the employee’s employment or termination of his employment”. The WRC held there was “informed consent”, disregarding the argument that the employee's lawyer at the time “did not have knowledge of the Irish legal system" and it held that the complainant was estopped from pursuing a complaint.

Also, in a Labour Court case from November 2019 (Higgins v Dept. of Foreign Affairs, UDD 1969) the claimant employee had signed a "General Release and Agreement" stating that she expressly released the employer from any "all liability, damages or causes of action, whether known or unknown, relating to [her] employment … or the termination of that employment, or any other acts or events…" The claimant accepted she had professional legal advice before signing the document. She also confirmed that she had received and retained a "separation package" (we are not told how much). The Court concluded that on the face of it the employee had the benefit of legal advice and accepted and retained valuable consideration in return for waiving her right to take legal proceedings. Her claim was dismissed.
 
While these cases are comforting for employers, there have been some situations in the past where such agreements unravelled. These might arise if, for example, the employee did not receive independent expert advice before signing up or where the agreement was not sufficiently clear on what exactly was being settled by the agreement.
 
For employers, there are some key elements that should be included in all settlement situations with employees, such as:
 
  • The agreement should be in writing;
 
  • The agreement should clearly state what precisely is being settled and what claims the employee is barred from bringing in the future;
 
  • The fact that the employee has taken independent expert advice. Here we may need to look a little closer. It may not be enough to say that the employee had the "opportunity" to take such advice. It really should say that the employee has actually taken such advice and that he/she understands what they are doing in signing the agreement. Furthermore, the advisor should ideally be named. An experienced trade union official can sometimes be appropriate but in other situations it may need to be a practicing lawyer.
Written by Julie Austin. 

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Areas of Expertise

Employment