Settling claims: Drafting COT3s to settle future claims

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Settling claims: Drafting COT3s to settle future claims

Published 7 March 2022

The EAT has upheld a tribunal judgment that the wording in a COT3 was wide enough to cover a claim brought after the COT3 had been signed by both parties. 

THE FACTS

Mr Arvunescu’s employment with Quick Release (Automotive) Ltd was terminated in 2014.  He claimed in the employment tribunal that he had suffered race discrimination.  In March 2018, Mr Arvnunescu and Quick Release signed a COT3, settling the claim.  The COT3 wording stated that the payment was in full and final settlement of all claims “of any kind whatsoever, wheresoever and howsoever arising….arising directly or indirectly out of or in connection with the claimant’s employment with the respondent, its termination or otherwise.  This paragraph applies to a claim even though the claimant may be unaware at the date of this agreement of the circumstances which might give rise to it or the legal basis for such a claim.”

In May 2018, Mr Arvunescu issued a new claim against Quick Release relating to allegations that, in early 2018, he had been rejected for a job by a German company which was a wholly owned subsidiary of Quick Release, and that Quick Release had engineered this rejection.  The tribunal held that he could not bring this claim because it had been compromised by the COT3.  Mr Arvunescu appealed to the EAT, on the basis that the COT3 wording could not be relied upon to settle a future claim. The EAT rejected his appeal and  upheld the tribunal’s judgment. 

Key to the courts’ judgments was a detailed consideration of the COT3 wording.   The EAT made some critical remarks about the drafting.  However, referring to the ordinary rule for construing a contract – which involves looking at the meaning “which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties” -  it was apparent that the intended reach of the waiver was very wide and that it covered Mr Arvunescu’s new claim.

WHAT DOES THIS MEAN FOR EMPLOYERS?

This is a useful case for employers, confirming that there is no reason, in principle, why claims that are brought after the date of a COT3 agreement cannot be waived. Employers and their advisors must ensure, when entering into COT3s, that if they wish to settle future claims the wording in the COT3 deals specifically with this.

Mr Adrian Arvunescu v Quick Release (Automotive) Ltd

Authors

Ceri Fuller

Ceri Fuller

London - Walbrook

+44 (0)20 7894 6583

Hilary Larter

Hilary Larter

Leeds

+44 (0)113 251 4710

Zoë Wigan

Zoë Wigan

London - Walbrook

+44 (0)20 7894 6564

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