Compromise agreements
Hilton UK Hotels Ltd v McNaughton, EAT website, 17 October 2005
Facts Cecilia McNaughton was employed by Hilton Hotels UK for 29 years. For a period of her employment, she had worked part-time, during which time she had been excluded from the company’s pension scheme.
When her employment ended, she entered into a compromise agreement, in which she agreed to accept a sum of money “in full and final settlement of any and all present and future claims… howsoever arising”. Unusually, the terms of the agreement went on to clarify that the claims McNaughton agreed to compromise were “the claims that you believe you have against the company”.
Later, McNaughton became aware that she might have a claim for having been excluded from the pension scheme, and brought a tribunal complaint. The tribunal considered whether she had already compromised the claim in the earlier agreement.
Decision A compromise agreement will be unenforceable unless it is in writing. It must identify the complaints it is settling; and the employee must receive legal advice on the implications, as set out in the Sex Discrimination Act 1975. The tribunal found that McNaughton had previously been unaware of the pension claim and should be allowed to pursue it. The company appealed.
Appeal The appeal was unsuccessful. The Employment Appeal Tribunal (EAT) agreed McNaughton should be allowed to continue with her new claim. It made clear, however, that this was based on the wording of the compromise agreement, which only covered claims of which she was aware at the time of signing. The EAT confirmed that it is possible to compromise future claims, provided the require-ments governing compromise agreements are met, and the wording is clear. It cannot be a ‘blanket agreement’, whereby an employee purports to sign away all of their tribunal rights.
Comment As case law and legislation have developed, compromise agreements have become far more complex, seeking to resolve every conceivable claim. This case serves as a reminder that it is possible to go too far in the drafting and that the fundamental question is always: ‘What is it that the employee agreed?’ Had the agreement been worded differently, the pension claim would have been excluded.
Disciplinary hearings
Centre West London Bus Limited v Balogun and Ambali, EAT website, 15 November 2005
Facts The two claimants – Mrs Adekemi Balogun and Mr Adeiyi Ambali – were bus drivers, who were suspended after it was alleged that Ambali had driven Balogun’s bus at the end of his shift, in breach of the company’s rules on drivers’ hours. Both were asked to attend separate disciplinary hearings, which were to be heard consecutively. On the advice of their union representative, who complained that the timing of the hearings was a breach of procedure, they did not attend. The company went ahead with the hearings in their absence.
After hearing the evidence, both employees were dismissed for gross misconduct. The drivers brought tribunal complaints for unfair dismissal.
Decision The tribunal found the company had established a potentially fair reason for dismissal, and holding consecutive disciplinary hearings was an appropriate course of action. However, the employees were not to blame for following the unreasonable advice of their union representative. A reasonable employer would have rearranged the hearings for an alternative date. The company’s decision to go ahead with the hearings was unreasonable, and the dismissals were found to be unfair. The company appealed.
Appeal The EAT ruled the tribunal was wrong in deciding that a reasonable employer would have rearranged the disciplinary hearings. The fact the employees chose to accept the represen-tative’s advice could not be blamed on the firm.
Comment The EAT said an employer would not always be entitled to proceed with disciplinary proceedings in the employee’s absence. In this instance, it was reasonable for the employer to do so. It depends on applying the “range of reasonable responses” test to the particular circumstances of the case.
