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Settlement Agreements – Employers Beware – A Must Read Case

The world is only too aware of the devastating impact Covd-19 has had on our working lives resulting in increased layoffs, pay cuts and unfortunately redundancies.The recent case of Keelings Retail Unlimited Company v Wasim Haskiya ADJ-00012963 is a must read for employers and a stark warning to be very careful when trying to reach a settlement with an employee whose employment you wish to terminate, whether on the grounds of redundancy or otherwise.Failure to ensure the employee obtained independent legal advice and understood what he was signing, resulted in an award of almost a year’s salary to the employee.BackgroundThis case focused on an appeal by the Appellant (Mr. Haskiya) against an Adjudication Officer decision  (in the Workplace Relations Commission) under the Unfair Dismissal Acts which found that Mr. Haskiya had waived his right to take any claims against his former employers Keeling’s (the Respondent). This was on the basis Mr. Haskiya had signed a settlement agreement and the “Terms of Settlement” reached between the parties amounted to a waiver by Mr. Haskiya of all his employment rights such that it was a settlement of all potential claims he could have against his employer.Mr. Haskiya gave evidence that on 15th August 2017, without any notice or consultation, he was handed a letter from his employer stating his position was redundant. He stated he was given the option of accepting the redundancy offer with a good reference and finishing work a few days later or, if he declined the offer, he would not receive a reference, salary or an ex gratia payment. He submitted that he was given two days to sign and return the compromise agreement to his employer.In shock and disbelief, Mr. Haskiya sent a series of emails to his employer and called a number of solicitors in his locality but was unable to secure an appointment to get legal advice on the compromise agreement. He stated that he felt under pressure to sign the compromise agreement as a result. He further stated he had family responsibilities which also placed economic pressure on him and that whilst he was an educated person, he was Palestinian and his first language was not English. He also gave evidence that he was unfamiliar with a common law system and did not have a full understanding of Irish employment law or his rights before signing.His manager (on behalf of employer) then gave evidence whereby a manager stated that he met with the Appellant on 15th August and explained that his position was being made redundant. His employer stated that he could take the documentation away and get advice if he wished but could not recall if he encouraged the Appellant to take legal advice.The Company stated that the Appellant was afforded two days paid leave to think about the redundancy and the offer of the ex gratia payment and he was asked to return on 18th August with his decision.The Company stated that when the employee asked what would happen if he did not sign the compromise agreement on 15th August, he was informed that he would not receive the ex gratia payment but that he was not threatened or coerced in any way.The Company subsequently met with Mr. Haskiya but did not ask him if he took legal or other professional advice. Mr Haskiya asked for a correction of a calculation in respect of his entitlements and this was done.The Company Financial Controller was asked to join the meeting and Mr Haskiya was asked if he was happy to conclude the matter and he said he was. All three parties shook hands and Mr Haskiya left the meeting.The Company also stated that at the meeting of 17th August Mr Haskiya did ask the Company to reconsider its decision to make his role redundant and did ask for an extension of 30 days without stating that he needed more time to take legal advice. His request for an extension of time was denied by the Company.Labour Court DecisionThe Labour Court noted that it was required to consider only if the dispute was settled by agreement between the parties as concluded on 17th August 2017.It noted that Mr. Haskiya based his case on Section 13 of the Unfair Dismissal Act in asserting that the agreement he signed could not result in a forfeiture of his statutory rights i.e. to take a claim against the Company.Section 13 of the Unfair Dismissal Act 1977 (as amended) provides“A provision in an agreement (whether a contract of employment or not and whether made before or after the commencement of this Act) shall be void in so far as it purports to exclude or limit the application of, or is inconsistent with, any provision of this Act”.The Court considered the case of Sunday Newspapers v Kinsella and Bradley FTD6/2006 [2006] ELR 227 and other caselaw which considered the application of Section 13 and compromise agreements.Although the decision was overturned the Court considered a number of cases referenced including Talbot (Ireland) Ltd v Minister for Labour and Others [1985] 4 JISLL 87, PMPA Insurance v Keenan and Ors [1983] IR 330, HC and [1985] ILRM 173, SC. Donal Hurley v Royal Yacht Club [1997] ELR 225 and Fitzgerald v Pat the Baker [1999] ELR 227.The Court referenced the Sunday World case which concluded as follows:“It is clear from the authorities that a provision on a statute prohibiting contracting out does not prevent parties from lawfully agreeing to settle or compromise claims based on the statute. There is, however, often a subtle but substantial difference between a genuine bargain to settle or dispose of a claim, which is lawful and enforceable, an attempt to exclude or limit the Act which is void and of no effect. The caselaw indicates that the following considerations are relevant in distinguishing the former from the latter:

  • The terms of any waiver must be construed strictly against the party from whom it emanated. Where there is doubt the course of negotiations between the parties must be examined so as to ascertain what was intended.
  • An agreement to waive statutory rights must be supported by adequate consideration.
  • The waiver should normally arise from an agreement reached as a result of meaningful negotiations and professional advice having been sought and given.
  • The waiver should list the various Acts being taken into account.
  • The waiver is only valid if it is based on a free and informed consent given by a person with full knowledge of their legal rights.
  • It is for the employer to ensure that the worker is capable of giving an informed consent and the employer should normally advise the worker in writing to obtain professional advice before inviting him or her to sign a waiver.

The Court looked at the agreement in the current case and noted that “the document signed but the parties on 17th August 2017 did not emerge from meaningful negotiations between the parties and consequently it must be construed strictly against the Respondent”.The Court noted that the appellant gave evidence that was not advised to seek legal advice at the meeting of 15th August and the respondent also gave evidence that he did not recall whether he advised the appellant to seek legal advice. It also noted that at the final meeting of 17th August the employer made no effort to determine whether the appellant had taken legal advice.The Court noted that “…no basis exists to conclude that the Appellant had ample opportunity to consider the document he signed on 17th August which purported to waive his statutory rights….In addition there was no basis to conclude that the Appellant’s consent to waive his rights was based on free and informed consent given by him with full knowledge of his legal rights”. It concluded that the “Respondent did not take adequate steps to ensure that the Appellant was, on 17th August 2017, capable of giving an informed consent to waive his statutory rights and took no steps to inquire into that matter at all”.The Court could not find that:

  • The agreement of the Appellant to waive statutory rights was supported by adequate consideration
  • The waiver arose from an agreement reached as a result of meaningful negotiations and professional advice having been sought and given
  • The waiver was based on a free and informed consent given but the Appellant with full knowledge of his legal rights
  • The employer made efforts to ensure that the Appellant was capable of giving an informed consent although the employer did, by letter dated 14th august, remark that the Appellant could obtain advice if he wished.

The Court concluded that it did not find that the waiver document signed on 17th August 2017 removed from the Court the jurisdiction to hear the appeal and having regard to the fact that the Respondent placed sole reliance on the waiver document as a defence to the complaint, the Court concluded the dismissal was unfair.DeterminationThe Court noted that the Appellant was out of work approximately 3 months after his dismissal and his earnings prior to dismissal were approximately 55,000. It also observed that the new employment resulted in a loss of approximately 25,000 per annum despite trying to secure employment at the same rate of pay.The Court awarded compensation of 50,000 and deducted the ex gratia payment already made to the Appellant of 20,000 leaving a net award due of 30,000 to the Appellant.

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