Authors: Bláthnaid Evans and Sheila Spokes

In a recent decision by the Labour Court in Wasim Haskiya v Keelings Retail Unlimited Company 2020, the Court set aside the decision of the Workplace Relations Commission (the “WRC”), and found that a settlement agreement between Wasim Haskiya (the “Employee”) and Keelings Retail Unlimited Company (the “Employer”) terminating the Employee’s employment was void. This decision was on the basis that the Employee was not provided with an adequate opportunity to seek independent legal advice prior to waiving his statutory rights under the agreement. As a result, the Court held that the dismissal of the Employee was unfair.

Background  ⚓︎

The Employee commenced employment with the Employer on a fixed-term contract as a Project Engineer in February 2015 and was subsequently offered a permanent position as Facility Support Engineer. In February 2017, the Employer conducted a business review of the Facilities Department where the Employee was employed. As a result, on 14 August 2017, the Employee was informed that his position was made redundant.

In addition to his statutory redundancy, the Employee was offered an ex-gratia payment for signingmand waiving his rights under the settlement agreement. The Employee returned the signed settlement agreement to the Employer on 17 August, terminating his employment on 18 August 2017.

Subsequently, the Employee lodged a claim to the WRC claiming that he had been unfairly dismissed under the Unfair Dismissals Acts 1977-2015 (the “Acts”).

The Employer argued that the WRC did not have jurisdiction to hear the matter as the Employee had signed a settlement agreement and that, as a result, the Employee’s claim should be dismissed. The Employee refuted this argument on the basis that he had not been provided or given the opportunity to seek independent legal advice and that, as a result, the terms of the settlement were null and void.

Decision of the WRC  ⚓︎

In dismissing the Employee’s claim, the Adjudication Officer held, while the terms of settlement did not specifically refer to legal advice, both parties had confirmed at the hearing that the Employee had been afforded two paid days off on 15 and 16 August 2017 to seek his own legal advice. As such, it was held that the settlement agreement reached between the parties amounted to a waiver by the Employee in full and final settlement of all claims against the Employer, including any claim under the Acts. On this basis, the WRC held that it did not have jurisdiction to go behind the waiver agreement entered into by the parties and that the complaint was not well founded. The Employee subsequently appealed this decision to the Labour Court.

Decision of the Labour Court ⚓︎

In setting aside the decision of the WRC, the Labour Court held that the Employer did not take adequate steps to ensure that the Employee was capable of giving informed consent to waive his statutory rights. In coming to this decision, the Labour Court considered Section 13 of the Acts in further detail. Section 13 states:

“13.— 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.”

From a review of previous decisions on the interpretation of Section 13 (Sunday Newspapers Limited v Kinsella and Bradley FTD6/2006 [2006] ELR 227), the Court drew a distinction between a genuine bargain to settle or dispose of a claim, which is lawful and enforceable, and an attempt to exclude or limit the Acts, which is void and of no effect. In ultimately deciding that the settlement agreement was null and void, the Court held that it could not conclude that:

• the agreement of the Employee 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. Consequently, the Court held that the settlement agreement must be construed strictly against the Employer.
• the waiver was based on the free and informed consent given by the Employee with full knowledge of his legal rights. In this regard, the Court noted that the Employee had given evidence as regards his shock at being informed at a meeting on 15 August 2017 of the intended termination of his employment on 18 August and he also gave evidence of the family economic circumstances which he said placed him under duress as a result. It was also accepted by the parties that the Employee was told that he would not receive an ex-gratia payment on termination if he did not sign an agreement with the Employer.
• the Employer made adequate efforts to ensure that the Employee was capable of giving informed consent. The Employee submitted that he was not, at the meeting on the 15 August, advised to seek legal advice. The witness for the Employer gave evidence that he did, on that date, encourage the Employee to seek advice but could not recall whether he had advised the Employee to seek legal advice. The Court stated that professional legal advice was sought by the Employee but that was not secured or given to him before his agreement to sign the waiver of his statutory rights. The Employer made no effort to establish whether the Employee was professionally advised by a legal or other professional practitioner before signing the document of settlement.

Accordingly, as the settlement agreement was deemed void, it did not remove the Court’s jurisdiction to hear the appeal. As the Employer placed sole reliance on the waiver document as a defence to the complaint, the Court concluded that the dismissal was unfair and measured the compensation which was fair and reasonable at €50,000. The Court ordered the Employer to pay compensation in that amount to the Employee less the ex-gratia payment of €20,000 made to the Employee on termination. Therefore, the net compensation amount paid to the Employee was €30,000.

Key Considerations for Employers ⚓︎

As stated by the Labour Court, the terms of any waiver must be construed strictly against the party from whom it has emanated. In the majority of employment cases, this responsibility will rest with the employer. In order to ensure a settlement agreement is fully enforceable, employees must be in a position to provide full and informed consent. In this regard, employers must ensure that they have advised the employee to seek independent legal advice, provided the employee with an adequate opportunity to do so prior to agreeing to the terms of settlement and that the settlement agreement itself reflects that the employee has been afforded this right. This obligation is particularly onerous if the employee does not have legal or union representation and, in such cases, it is useful if the employer can also contribute to the employee’s legal fees as part of the terms of settlement.

This case also illustrates the need for fair procedures as part of any dismissal process, as if a process is not followed and an employee is ambushed with a settlement agreement with little to no time to consider, but still signs and without independent legal advice, an employer could find themselves liable to a claim under the Acts with a very limited defence.