Employee’s personal injury claim allowed to proceed despite Employment Tribunal settlement

Last week, in Farnham-Oliver v RM Educational Resources Ltd, the High Court allowed a personal injury claim to be pursued by an employee against his former employer, despite settlement of an Employment Tribunal claim on the issues arising from the same period of employment in 2015. The case is a further reminder of the need for carefully drafted settlement agreements when is dispute is compromised.

Background

Mr Farnham-Oliver (the “Claimant”) was a customer advisor at RM Educational Resources Limited (the “Company”). The Claimant suffered with various physical and mobility problems, for which he received various forms of treatment. Whilst working as an employee of the Company in 2014, the Claimant lodged a claim with the Employment Tribunal. The Claimant had a range of grievances with the Company, including suffering from work-related stress because of his working environment.

The Employment Tribunal Settlement

The parties reached a settlement agreement in the tribunal claim (the “Agreement”) in February 2015 under which the Claimant was paid £12,000 by the Company in damages.

During the settlement negotiations, the Claimant made it clear to the Company that he also wished to pursue a claim for “personal injury suffered as a result of work-related stress during the course of his employment.”

The Agreement was made in a written ACA COT3 Form. Usually, such a settlement would clearly express that no future claims, arising out of the same period of employment, should be able to be brought in future. It is a matter of public policy that claimants should not be able to continue bringing claims against the same defendant over and over again. To this end, settlement agreements usually contain a clause that the settlement is ‘full and final’ and prevents any future actions being brought. Employers are well advised to seek such terms in a settlement agreement.

The terms of the Agreement

The decision of the High Court in this case hinged on the specific terms of the Agreement. Clause 6 stated that:

“Subject to the exclusion at clause 7 below…”a full and final settlement of all claims the Claimant had or might have against the defendant arising from the employment.”

Crucially, the exclusion at Clause 7 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.”

The wording of Clause 7 essentially left the door open for the Claimant to be able to pursue the personal injury claim for work related stress against the Company in the future (the “PI” claim).

The PI Claim

The PI claim was issued in the High Court on 3 July 2020, over 5 years after the date of the Agreement. The Company applied to strike out the PI claim on the basis that it was ‘duplicative litigation and an abuse of process.’ However, this argument failed because of the wording of Clause 7 of the Agreement. Master Dagnall stated in his Judgment that:

“The defendant had not required the personal injury claim to be included in the compromise but had allowed it to be specifically excepted, and thus accepted that it was not part of the Tribunal Claim, and, at first sight, was prepared to take the risk that the Civil Claim would be brought.” (para 76).

Commentary

What is concerning for employers, is that this is the latest in a series of decisions in which claimants have brought civil claims several years after they had reached a settlement in the Employment Tribunal. Master Dagnall made clear that the issue of whether there is an abuse of process in bringing another claim depends on the wording and interpretation of the individual settlement agreement reached between the parties.

Master Dagnall concluded that the wording of the Agreement positively permitted the PI claim to be brought. The implication is that, had the exclusion in Clause 7 not been included in the Agreement, the PI claim would have been struck out.

It is clear that the precise wording of settlement agreements is crucial in determining whether future personal injury claims may be brought by employees. Conversely, if you are faced with an employer liability claim and the same employee is pursuing a claim against you in the Employment Tribunal, seek to settle both claims in the same settlement agreement. If you are fully insured against employment claims, you should make your insurer aware of any actual or potential Tribunal claim so that settlement of both may be negotiated at the same time. It is customary for employers to agree to pay for an employee to seek independent legal advice on a settlement agreement.

If you require further information or advice about the decision or about employer liability claims or settlement agreements, please contact our Corporate Claims or Employment teams.

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