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    COMPROMISE AGREEMENTS : EMPLOYMENT TRIBUNALS : JURISDICTION :

    MISREPRESENTATION : VOID CONTRACTS : JURISDICTION TO CONSIDER VALIDITY OF COMPROMISE AGREEMENT : s.203(3) EMPLOYMENT RIGHTS ACT 1996 : s.203 EMPLOYMENT RIGHTS ACT 1996

     

    Employment tribunals had jurisdiction to consider whether a compromise agreement could be avoided at common law before deciding if it constituted a valid agreement for the purposes of the Employment Rights Act 1996 s.203.

     

    The appellant employer (X) appealed against an employment tribunal’s decision that it had jurisdiction to determine the enforceability of a compromise agreement. The first respondent company (H) had employed the second respondent employee (V) until her resignation. V claimed that she had agreed to resign in return for a monetary settlement prior to H’s transfer to X under the Transfer of Undertakings (Protection of Employment) Regulations. A compromise agreement was entered into between V, H and X under which she was to receive a total of £43,750. The agreement complied with the conditions set out in the Employment Rights Act 1996 s.203(3).

     
    However, a few weeks later H went into voluntary liquidation and the sums under the agreement were not paid. V claimed that H and X must have known that the money was not going to be paid at the time the compromise agreement was entered into, and that she was misled into entering the agreement as a result of misrepresentation. X relied on Eden v Humphries & Glasgow (1981) ICR 183 EAT and Larkfield of Chepstow v Milne (1988) ICR 1 EAT and submitted that the employment tribunal’s only task was to determine whether s.203(3) had been complied with, and any issues relating to the enforceability of the agreement had to be determined in the county court.

     

    HELD: (1) The dicta in Hennessy v Craigmyle & Co (1985) ICR 879 EAT was powerful support for the approach of the employment judge, which was that an employment tribunal was entitled to consider whether a compromise agreement could be avoided before deciding if it constituted a valid agreement for the purposes of s.203. In that case the court had recognised that contracting out provisions could be avoided on the grounds on which an agreement could be avoided at common law, and economic duress was an example of that. Misrepresentation was given as a further example in Greenfield v Robinson (EAT/811/95). The cases relied upon by X were not helpful. In Eden and Larkfield the compromise related to an appeal to the EAT, rather than to the employment tribunal, Eden and Larkfield distinguished, and Byrnell v British Telecommunications Plc Unreported November 4, 2004 EAT not followed. Further, in Larkfield the EAT had not been referred to the judgment of Popplewell J in Hennessy.

     
    (2) Section 203(3) permitted the parties to make a compromise agreement but the word “agreement” must mean a valid agreement, and the employment tribunal had to ensure that any purported compromise agreement was valid. There was nothing in the 1996 Act which precluded the employment tribunal from performing that task, Hennessy and Greenfield applied.

     

    Appeal dismissed

     

    INDUSTRIOUS LTD v (1) HORIZON RECRUITMENT LTD (In Liquidation) (2) J

    VINCENT (2009)

    EAT (Silber J) 11/12/2009

     

    “Lawtel”:  21.12.09