Settlement agreements are legally binding agreements under which an employer usually offers a sum of money in return for which the employee agrees not to bring any future claims. In Arvunescu v Quick Release (Automotive) Ltd, the Court of Appeal held that Mr Arvunescu could not bring a victimisation claim because the agreement included claims he knew about when he signed it.
Basic facts
Mr Arvunescu, a Romanian national, started work at QRA Ltd on 6 May 2014, but was dismissed a month later. He brought tribunal proceedings for race discrimination which were subsequently settled via an agreement through ACAS known as a COT3 on 1 March 2018. Not only did this cover claims that might arise in connection with his employment with QRA Ltd, but also any that he did not know about at the date of signing the agreement.
In May 2018, Mr Arvunescu brought another claim, this time for victimisation in which he complained that he had been turned down for a job in February of that year at a wholly-owned subsidiary of QRA Ltd in Germany because of his history with QRA. The company argued that his claim fell within the scope of the settlement agreement and, therefore, could not proceed.
Decisions of lower courts
Dismissing his claim, the tribunal held that the COT3 agreement was unequivocal in stating that it applied “in full and final settlement of all or any claim or right of action arising directly or indirectly out of or in connection with” Mr Arvunescu’s employment. It also struck out the claim of victimisation on the basis that it had no reasonable prospect of success.
The EAT (weekly LELR 767) allowed the appeal in part, holding that the tribunal judge was wrong to conclude that the victimisation claim had no reasonable prospect of success. However, it upheld the finding that the claim fell within the scope of the COT3 agreement and, therefore, had been settled.
Mr Arvunescu appealed, arguing that the COT3 was ambiguous in its wording and should not, therefore, have been interpreted narrowly. He also argued that it should have been assessed objectively in the way that a bystander would have understood it, as opposed to the parties themselves.
Decision of Court of Appeal
The Court of Appeal noted that the agreement not only referred to claims arising directly or indirectly “out of” Mr Arvunescu’s employment, it also referred more broadly to claims arising indirectly “in connection with” his former employment.
Given that his most recent claim had arisen because of the connection between QRA Ltd and the German company that had allegedly victimised him, it followed that the decision to reject his application had come about because Mr Arvunescu had brought proceedings against QRA. As the claim arose “in connection“ with his previous employment, it fell within the scope of the agreement and had, therefore, been settled.
The court then turned its attention to the context in which the agreement was reached and the wording of the agreement itself. It concluded that the purpose was to settle claims connected with Mr Arvunescu’s employment as at 1 March 2018, whether or not they were known about at that date.
As the claim was connected with his employment with QRA and existed at the date of the settlement and as the clear intention underlying the settlement agreement was to settle all such existing claims, it could not proceed.
Comment
This decision confirms that future employment claims which the claimant is aware of at the time a claim is settled, can be settled under the terms of a COT3 or settlement agreement provided the wording is drafted widely enough and is sufficiently clear so that it covers such claims.