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05.02.2019

WRC precluded from hearing unfair dismissal claim

WRC decision: employer wins settlement agreement dispute

Employers concerned by the prospect of ex-employees challenging the validity of a signed settlement agreement will note the recent Workplace Relations Commission (WRC) determination of a claim by a catering assistant who argued that she did not receive legal advice prior to signing her settlement agreement.

WRC jurisdiction to hear the claim

The employer argued that the WRC did not have jurisdiction to hear the claim on the basis that the employee had waived her right to make any claims under unfair dismissals legislation by signing the settlement agreement voluntarily.

Conflicting evidence

The employer initiated disciplinary proceedings against the catering assistant in August 2017 for a breach of policy concerning the wearing of safety shoes.  Prior to the hearing, the employee’s trade union representative approached the HR Director to request a settlement from the company in exchange for the employee’s resignation.  The employer agreed to the request and paid the employee €3,000 in full and final settlement of the dispute. The employee signed the agreement relying on the advice of her trade union representative, who also witnessed the employee signing the agreement.

The employee argued that she was coerced into signing the agreement and was expected to sign it without taking the time to seek independent legal advice. The employee’s claim that she was not bound by the terms of the settlement agreement centred on the fact that she had not received adequate legal advice.

Case law on validity of settlement agreements

For employers to successfully rely on the terms of a settlement agreement, the employee should be advised of his/her entitlements under employment legislation along with their right to take appropriate advice before signing it. The employer referred to the case of Hurley v Royal Yacht Club to support this position.

The High Court, in the case of Sunday Newspapers v Kinsella and Anor, has also held that appropriate advice does not have to be professional legal advice in writing.

WRC determination

The Adjudication Officer (AO) noted that the employee was accompanied by her trade union representative at the disciplinary meeting and that the advice of the trade union played a significant role in the negotiated agreement between the parties.

Absent any direct evidence from the trade union representative contradicting this version of events, the AO found the employer’s evidence more compelling.  The WRC did not therefore have jurisdiction to hear the employee’s unfair dismissal claim as she had waived her right to do so under the settlement agreement.

Advise employees of their rights

The decision demonstrates that employees should always be offered the opportunity to be advised of his/her entitlements under employment protection legislation before entering into a proposed settlement agreement. In addition, the settlement agreement should list the various applicable statutes or at least make it clear that the legislation has been taken into account by the employee prior to signing a settlement agreement.  This position has been established in both the WRC and the High Court.

While this decision supports the view that the employee will not always need to have received professional legal advice to uphold the validity of a settlement agreement, employers should nevertheless seek legal advice themselves. This will reduce the risk of an employee challenging the terms of a settlement agreement on the basis that s/he has not received independent legal advice prior to signing the agreement.

Protect your business against WRC claims

Employees enjoy strong protections under unfair dismissals legislation. You must act carefully before asking an employee to sign a settlement agreement or make any decision in relation to termination of employment. To discuss this issue or any HR concern you might have, call us today on +353 1 886 0350.

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