Compromise Agreements: the perils of delay
This was highlighted in the recent case of Kirklees Metropolitan Council v Radecki [2009] EWCA Civ 298 heard before the Court of Appeal. As ever the case turned on its own particular facts, but the lesson coming from it is do not delay signing a compromise agreement once the employment has terminated.
In this instance Mr Radecki was a teacher at a school run by the Council. He was appointed at the beginning of the 2005/06 academic year. By the following October he had been suspended, pending disciplinary proceedings, which never took place because the parties entered into settlement negotiations and a compromise agreement was drawn up and given to Mr Radecki’s representatives. Prolonged negotiations over the terms of the agreement and the reference offered to him took place, until the Council appears to have lost patience with him. His final salary payment was made in October 2006 and a P45 was issued to him stating the31st October as the leaving date.
The compromise agreement was labelled, as virtually all are, “without prejudice and subject to contract”, meaning that it was effectively “off the record”. When Mr Radecki subsequently issued proceedings for unfair dismissal on 7th March 2007, he was more than three months beyond the effective date of termination and was not allowed to present his claim to the Tribunal. Neither could he rely upon what was stated or offered in the compromise agreement.
This meant that the Council would have been under no obligation to make any payments to Mr Radecki to settle the dispute and he would have walked away empty handed. Had he accepted the compromise agreement he would have received the monies offered there and would have secured some amount of compensation. Alternatively, if the offer was really too unreasonable for him to accept, he should have issued proceedings at the Tribunal before the expiry of three months from the effective date of termination – on these facts that would have been 30th January 2007.
We advise clients upon compromise agreements (aka settlement or termination agreements) every day. If you require advice on any issue concerning a compromise agreement you may have received please do not hesitate to contact us.
Michael Scutt 29.7.09