Compromise Agreements

An interesting case on compromise agreements appears on BAILII today. An employee signed a compromise agreement, which purported to settle "all claims past or future arising out of the termination of her employment". The EAT held, inevitably, that this was not sufficient to compromise claims which arose before termination of her employment and that she was free to bring proceedings in respect of those.

More interestingly, the compromise agreement was held inadequate to compromise her claims of race discrimination. The body of the agreement stated that it was in settlement of all claims for "redundancy payments, unfair dismissal, discrimination on grounds of race, sex and/or disability". However, the recitals at the end simply stated that "It is confirmed that the conditions regulating this Agreement in section 203 of the Employment Rights Act 1996 are satisfied." There was no similar recital in respect of the Race Relations Act 1976, and the EAT held that the agreement was therefore insufficient to compromise the race claim (notwithstanding the clear intent of the parties), and she was free to pursue the claim.

Palihakkara v BT plc