Settlement agreements – waiving Personal Injury claims

Case Facts

The Claimant was employed by the Respondent as a Customer Adviser. The Claimant issued an employment tribunal claim whilst still employed at RM Educational Resources LTD alleging that the Respondent failed to make reasonable adjustments and alleging that he had suffered a personal injury arising from work-related stress.

In 2015, the parties entered a Settlement Agreement in relation to the ET claim.

Clause 7 of the Settlement Agreement stated, “The Claimant is not prevented from pursuing his potential claim for damages arising from a personal injury allegedly suffered as a result of work-related stress which is currently being handled [sic] by Norrie Waite and Slater Solicitors on behalf of the Claimant which was raised with the Respondent by way of solicitors’ letter dated 28 January 2015”.

The Claimant issued a PI claim five years later. The Defendant applied for a strike out on the premise the claim was:

(1) “Duplicative litigation”

The Defendant argued the subject matter of the civil claim was part of the employment tribunal action.

(2) An “abuse of process”

The Defendant noted that, notwithstanding the provisions contained in the Settlement Agreement, the claim was an abuse of process due to the Claimant being guilty of undue harassment.

The Outcome

Master Dagnall in the High Court determined that the Settlement Agreement permitted civil claims being brought by the Claimant. He further dismissed the employer’s strike out application on the basis that the employer failed to show the employee’s claim was an abuse of process. He held that Respondents who rely on an abuse of process must apply the “broad merits-based judgment” involving consideration of principles established in Johnson v Gore Wood (a House of Lords case) and contextual matters relating to the instant case – e.g. the Settlement Agreement.

When Master Dagnall considered the principles of Gore in light of Clause 7 of the Settlement Agreement, the learned Judge considered that the Settlement Agreement did not intend to bar the personal injury claim and, accordingly, failed to meet the test for a successful abuse of process strike out.

The High Court then turned to the “undue harassment” claim arising from the employee bringing a PI Claim. Master Dagnall held:

“There is no “undue harassment” of a party (the defendant) which has agreed that a claim against it can continue. There has been no contravention of or inconsistency with any judicial order. There has been no serious waste of time or expense. All that has happened is that one claim was initiated, dealt with by non-dispositive compromise and withdrawal, and the specifically excepted claim is then brought in another jurisdiction. I cannot see any misuse or abuse of either jurisdiction or any inappropriate invasion or misuse of either private or public interests.”

Points for consideration

Practice varies as to the extent to which potential personal injury (PI) claims are waived under a Settlement Agreement.

While employers want maximum certainty and ideally would try to obtain a waiver of a PI claim, there is almost certainly going to be push back from the employee’s advisor, who would argue that it is not reasonable to expect the employee to waive his or her right to bring a claim he is not aware of. General practice, therefore, is to exclude PI from the waiver of claims altogether except claims for injuries resulting from discrimination claims.

It is important to consider the terms of a Settlement Agreement in the context of the individual employee and ensure that the Agreement reflects the intentions of the parties and is specific as to what types of personal injury claims are included in the Agreement.

In the instant case, had the Respondents limited the personal injury claim to injuries arising outside of the course of employment, which are unrelated to the employment tribunal dispute then it is likely that the Claimant would have been precluded from bringing the PI claim.

This case is a stark reminder of the requirement for attention to detail when drafting Settlement Agreement clauses. Extensive exclusions and limitations to a waiver are likely to bolster an employer’s defence, such as abuse of process, nevertheless, it will be contingent on the drafting of the Settlement Agreement and, in particular, the facts of the case.

Sharpe Pritchard has a number of experienced employment solicitors who can assist employers with complying with the latest employment regulations and best employment practices.

Please contact Julie Bann if you wish to discuss the implications of this article in more detail.

Julie Bann is a partner and James Hughes a trainee solicitor at Sharpe Pritchard LLP

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