Compromise agreements
Hinton v University of East London [2005] IRLR 552


This case is significant to all employment lawyers. A compromise agreement was expressed to be 'in full and final settlement of all claims in all jurisdictions (whether arising under statute, common law or otherwise) which the employee has or may have against the university... including in particular' 11 kinds of claim that were then itemised.


The question for the Court of Appeal was whether the fact that the claimant had signed the agreement prevented him from pursuing a 'whistle-blowing' claim, given that a complaint of the kind falling within section 47B of the Employment Rights Act 1996 was not included within the itemised list. A tribunal considered that the claim (which the claimant had raised in correspondence between the parties before the agreement was signed) could be brought, but the Employment Appeal Tribunal allowed the employer's appeal.


However, the Court of Appeal concluded that the original decision was correct. The requirement in section 203(3)(b) of the Act that, to constitute a valid compromise, an agreement must 'relate to the particular proceedings', must be interpreted as requiring the particular proceedings to which the compromise agreement relates to be clearly identified.


The Court of Appeal accepted that a single document can be used to compromise all the particular proceedings. But it is not sufficient to use a 'rolled-up' expression such as 'all statutory rights'. The question to be asked is: 'How does the agreement relate to the particular proceedings in question?'


In the present case, the agreement relied on lacked the particularity required to compromise the employee's claim under section 47B. The agreement referred to 'all claims arising under statute', but no particular statute was stated expressly, there was no particular description of the legal nature or the factual basis of any proceedings arising under statute, and no mention was made of public interest disclosures or of any detriment suffered by the claimant as a result of making them. Therefore, the appeal would be allowed.


Lady Justice Smith indicated that for a claim, or potential claim, to be compromised, it must be identified in the agreement either by a generic description such as 'unfair dismissal' or by reference to the section of the statute giving rise to the claim. It is not sufficient to identify the proceedings only by reference to the statute under which they arise. Many employment rights might arise, for example, under the Employment Rights Act and, to comply with section 203(3)(b), the particular proceedings to which the agreement relates must be more clearly identified.


Lord Justice Mummery observed that if actual proceedings are compromised, it is good practice for the particulars of the proceedings and of the particular allegations made in them to be inserted in the compromise agreement in the form of a brief factual legal description. If the compromise is of a particular claim which is not yet the subject of proceedings, it is good practice for the particulars of the nature of the allegations and of the statute under which they are made or the common law basis of the claim to be inserted in the compromise agreement in the form of a brief factual and legal description.


Lady Justice Smith added that she 'would not regard it as good practice for lawyers to draft a standard form of compromise agreement which lists every form of employment right known to the law. Compromise agreements should be tailored to the individual circumstances of the instant case'.


Against that background, it is interesting to note Lord Justice Mummery's introduction to his judgment: 'Like other people, employers and employees sensibly settle most of their disputes. The law encourages them to mend their differences. It upholds and enforces their compromises. The last thing that they want and the employment tribunals need is a dispute about an agreement aiming to resolve a dispute. Yet that is what has happened here. To make matters worse, there are conflicting decisions on the validity of the compromise agreement made between the parties... The opinions of experienced tribunal members differ on the construction both of the agreement itself and of the statutory provisions to which it must conform. Certainty is vital in this part of the law. As far as possible, parties and their advisers are entitled to know what they should do in order to achieve a valid compromise and to avoid the risk of disagreement about it.'


That sets out the central issue with admirable clarity. Arguably, however, the judgments do not offer such certainty. As the editor of the Industrial Relations Law Reports asks: 'Where does this leave the drafting of compromise agreements?' Lady Justice Smith's belief that they should be tailored to the precise circumstances is 'a laudable sentiment, but the fact remains that the employers in Hinton lost their point not because their list of potential claims was over-inclusive, but because it was incomplete'.




Agency workers

Bunce v Postworth Ltd t/a Skyblue [2005] IRLR 557


Cases concerning the legal status of employment agency workers continue to vex practitioners, courts and tribunals.


Here, a welder claimed unfair dismissal, arguing that a contract of employment with the agency was entered into each time he went on an assignment. A tribunal and the Employment Appeal Tribunal (EAT) ruled that his agreement with the agency lacked the necessary mutuality of obligation and degree of control for establishing a contract of service.


The Court of Appeal dismissed his appeal. His submission that the written agreement was simply an 'umbrella' agreement covering the relationship generally and there were then separate contracts for each specific assignment, and that each such contract was a contract of service, could not be accepted on the facts of the case. Where, as here, the master agreement contains detailed provisions governing the relationship between the agency and the worker in respect of each assignment, there is little room for individual contracts between those parties for each assignment.


Lord Justice Keene noted 'that there is now a large and growing number of people in full-time or nearly full-time work who, because they work under agency agreements, do not enjoy the full range of employment rights conferred under the legislation on those working under more conventional arrangements... this problem may in due course be regarded as a matter for legislation. It is not one capable of being overcome by judicial creativity'.




Tribunal procedures

Moroak t/a Blake Envelopes v Cromie [2005] IRLR 535


A respondent instructed Industrial Relations Workshop to act for it in a tribunal case. The response was lodged with the employment tribunal 44 minutes out of time because of a computer malfunction. The response was not accepted and the tribunal held that it had no power to review its decision.


The EAT allowed an appeal. Although once the 28-day time limit has expired, a tribunal has no power to entertain an application for an extension of time for presenting a response, a decision not to accept a response because it is out of time can be reviewed in accordance with rule 34 of the Employment Tribunal (Constitution and Rules of Procedure) Regulations 2004, where the interests of justice require such a review.


In deciding whether to exercise its discretion in favour of allowing a review against a refusal to accept a response by a respondent which is out of time, the test to be applied must be the same as under rule 4(4) for an extension of time for registering a response, or an application under rule 33 for a review of a default judgment, namely that which is just and equitable. The tribunal should apply the principles identified in Kwik Save Stores Ltd v Swain [1997] ICR 49, with regard to an application for an extension of time for serving a notice of appearance.


In the present case, no reasonable tribunal would do other than allow a review against the refusal to accept the response.




Employment Appeal Tribunal procedure

Khudados v Leggate and others [2005] IRLR 540


The EAT has considered the principle that amendments to cases should be allowed in general, provided that the public interest in the efficient administration of justice is not harmed and any prejudice to the other party caused by the amendment can be compensated for in costs.


The EAT said this principle cannot be applied to amending a notice of appeal in the EAT without some modification. The 2002 practice direction required specifically that applications to amend should be made 'as soon as the need for the amendment is known'.


The EAT attaches importance to the speedy resolution of employment disputes and takes a strict view of anything, including proposed amendments, that might delay a final hearing, especially where there has been a failure to comply with a rule or the practice direction. No amendment can properly be entertained unless it at least raises a point of law which gives the appeal a reasonable prospect of success at a full hearing, or whether there is some other compelling reason for the appeal to be heard.


Other matters to be taken into account in determining whether or not an amendment should be allowed include:


  • Whether the applicant was in breach of the EAT rules of procedure or the practice direction;


  • Any extension of time is an indulgence and the EAT is entitled to a full, honest and acceptable explanation for any delay or failure to comply with the rules or practice direction;


  • The extent to which the amendment, if allowed, would cause any delay;


  • Whether allowing the amendment would cause prejudice to the opposite party, and whether refusing the amendment would cause prejudice to the applicant by depriving him of fairly arguable grounds of appeal;


  • In some cases, it may be necessary to consider the merits of the proposed amendments;


  • Regard must be had to the public interest in ensuring that business in the EAT is conducted expeditiously and that its resources are used efficiently.




  • Parental leave

    Rodway v South Central Trains Ltd [2005] IRLR 583


    The Court of Appeal has rejected an appeal against the decision of the EAT reported at [2004] IRLR 777. Parental leave may only be taken for a minimum of one week, or in blocks of weeks.


    According to Lord Justice Keene: 'One can readily see that employers might well prefer to be able to make arrangements for temporary employees to cover for a week during an employee's absence, rather than to face the problems arising from an employee being absent for a single day or two odd days'.


    The court did not accept that the wording of the regulations in question was ambiguous; had it been, ministerial statements about how the rules are to be interpreted put the matter beyond doubt.


    By Martin Edwards, Mace & Jones, Liverpool and Manchester