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Issue 54 (January 2001)
More relations arriveMotoring to employment rightsAsk not what the union can do for you...Compromising positionsTrade unions cross the first CAC hurdlesBut what does it all mean?Sauce for the goose not the gander
The use by employers of settlement agreements to terminate employment continues to provide a steady trickle of case law. In this case, Sutherland had signed a letter setting out payments to be made to him on termination and stating "These sums are in full and final settlement of any claims you may have against the Company arising out of your employment or its termination".
He signed the letter signifying his agreement to the terms. He later lodged an IT1 claiming unfair dismissal, sex discrimination, damages for breach of contract, unlawful deduction from pay and payments of sums due.
The preliminary issue for the Employment Tribunal was whether the letter prevented Sutherland from bringing some or all of his claims against his former employer.
An agreement purporting to exclude or limit the operation of any provision of the Employment Rights Act or to preclude a person from bringing any proceedings under the Act in the Employment Tribunal is void unless it complies with section 203. Strict requirements must be complied with under section 203 and there was no dispute that the letter Sutherland had signed did not comply with section 203.
The claims based on breaches by the employer under employment legislation - such as unfair dismissal, unlawful deduction of wages and discrimination were not affected by Sutherland signing an agreement "in full and final settlement of any claims" and a Tribunal could hear these, but how did that affect Sutherland's breach of contract claim?
The Employment Appeal Tribunal took a restricted view of Section 203 - "The Court picks up the agreement after the statutory scissors of section 203 have cut out the parts to which effect is not to be given and enforces the remnant. To oblige the scissors to dismantle the whole agreement would be to do more than the Act stipulates".
The agreement therefore prevented Mr Sutherland from pursuing his claims for breach of contract but was void as far as his statutory claims were concerned.