Friday 28th October 2016
This precedent is only for academic use only
An agreement to refrain from intiating proceedings in an employment
This Agreement is made between [XY (hereafter referred to as the Employee
or Applicant, or as the case may be])] and [ABCLtd (hereafter referred
to as the Company [or ˜Respondent, or as the case may be])]
It is agreed between the parties as follows:
1. The Company will pay to the Employee the sum of [£12,000]
within [12days hereof] or as the case may be].
2. The Employee will refrain from [instituting a complaint against
the Company before an employment tribunal] [or continuing his complaint
against the Company before the employment tribunal under Case No [specify]]
in respect of his allegation that on [date] the Company:
(give sufficient details to identify the particular complaint under
each generic head or legal reference);
dismissed him unfairly; and/or made an unlawful deduction from his
discriminated against him/her on the grounds of race or sex ; and/or
took action short of dismissal against him relating to his trade union
membership or activities by (give sufficient details to identify the
[3. The Employee accepts the payment made by the Company in full and
final settlement of all other claims which he has or may have against
the Company arising out of his employment or the termination thereof,
being claims in respect of which an employment tribunal has no jurisdiction
[except any claims for damages for personal injury or as the case may
[The contents of this Agreement are to remain confidential other than
the fact of the existence of the Agreement. This clause does not apply
to [name] the Claimant's spouse]
[The Respondent agrees to provide the attached reference to any potenial
employer of the Claimant who requests a reference]
4. The Employee acknowledges that, before signing this Agreement,
he received independent legal advice from (name of adviser), [a qualified
lawyer or certified union official or certified advice centre worker,
as the case may be]5, as to the terms and effect of this Agreement and
in particular its effect on his ability to pursue his rights before
an employment tribunal.
5. The conditions regulating compromise agreements under the [Employment
Rights Act 1996 and/or Sex Discrimination Act 1975 and/or Race Relations
Act 1976 and/or Trade Union and Labour Relations (Consolidation) Act
1992 and/or Disability Discrimination Act 1995 are satisfied in relation
to this Agreement.
NB. It might be worth reading my following article on the new Hinton
case before drafting a Compromise Agreement:
HINTON (appellant) v. UNIVERSITY OF EAST LONDON (respondents) 
EWCA Civ 532 2005] IRLR 552
The latest Court of Appeal case regarding compromise agreements warns
drafters against taking shortcuts. In this case the meaning of, s.203(3)(b),
of the Employment Rights Act, the requirement that, the agreement must
relate to the particular proceeding.
The Claimant, a university lecturer took early retirement from his post
under an agreement which included a provision purporting to compromise
all claims against the university. The agreement was intended to satisfy
the conditions relating to compromise agreements set out in s.203 of
the Employment Rights Act.
What it Said in the Agreement
Under clause 11, the Claimant agreed to refrain from instituting or
continuing proceedings before an employment tribunal in relation to
any claims or complaints compromised under clause 9.
Clause 9 in the agreement provided the following, This agreement is
made without any admission of liability on the part of the university
on the basis that its terms are 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
officers or employees arising out of or in connection with his employment
with the university, the termination of his employment or otherwise
including in particular the following claims which have been raised
by or on behalf of the employee as being claims which he may have ...
There then followed a seemingly extensive list of 11 particular kinds
of claim under the Employment Rights Act and under the discrimination
statutes and at common law.
Following the termination of his employment, Dr Hinton instituted tribunal
proceedings against the university under s.47B (the Employment Rights
Act, relating to the right of a worker not to be subjected to a detriment
by his employer by reason of his having made a protected disclosure).
The University contended that pursuing such a claim constituted a breach
of the compromise agreement. The Employment Tribunal concluded that
s.47B was not mentioned in the particular itemised claims listed in
the agreement and therefore, the agreement was badly drafted and could
not be construed as having the effect of excluding the particular complaint
now brought by the Claimant.
The EAT was satisfied that s.47B fell within the general words at the
beginning of clause 9 and allowed the appeal. The EAT deemed the list
which followed as illustrative only of the type of claim to be compromised.
On appeal, it was submitted by the Claimant that the potential claims
made by the Claimant should be expressly particularised either by reference
to the nature of the claim or by reference to the relevant statutory
provision if they were to be compromised and that a purported catch-all
clause as seen in Clause could not satisfy the requirement alone. The
Respondent argued that for an agreement to relate to the particular
proceedingswithin the meaning of s.203(3)(b), it was not necessary for
express claims to be particularised in order to be compromised, as long
as they fell within the contractual scope of the agreement.
The Court of Appeal held that the EAT had erred in allowing the employers
to appeal against the decision of the employment tribunal. The employment
tribunal had not been wrong in holding that a compromise agreement expressed
to be 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 particular11 kinds
of claims which were then itemised, did not prevent the claimant from
pursuing a complaint, which had not been listed, namely s.47B of the
Employment Rights Act.
The requirement in s.203(3)(b) of the Employment Rights Act that, in
order to constitute an effective compromise, an agreement must relate
to the particular proceeding, must be construed as, requiring the particular
proceedings to which the compromise agreement relates to be expressly
identified. The appeal would therefore be allowed.
This decision sends a warning that when drafting compromise agreements
only a ˜belt and braces approach will do if an agreement is to
compromise all potential claims. The agreement should name sections
within particular statutes. Mummery LJ, giving the leading judgment
stated that a compromise agreement must specify the particular statutory
claim being compromised or at the very least, the factual basis of the
claim (para. 22). It is not sufficient to identify the proceedings only
by reference to the statute under which they arise. In addition, or
alternatively, the Claimant should give a generic name for the type
of claim to be precluded such as, ˜unfair dismissal.
For an alternative means of settlement, where an ACAS conciliation officer
has "taken action under section 18 of the Employment Tribunals
Act 1996", a COT3 form of settlement may be used to preclude further
claims (see ERA 1996 s.203(2)(e).
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