Can you settle future claims neither party are anticipating via a settlement agreement or COT3?

The EAT provides some useful learning points in Darlington v London Borough of Islington. This case is particularly relevant where the employer is a local authority, rather than the individual school or college. 

The law

Employers can only prevent an employee from bringing statutory employment-related claims in a tribunal (such as whistleblowing, discrimination and unfair dismissal) if they enter into an agreement with the assistance of an Acas conciliator (COT3) or a settlement agreement.

Although these agreements largely achieve the same result (and are often written in very similar terms), there are important differences:

• A COT3 is legally binding when the parties accept the terms of the offer and this is clearly communicated to each party - even if they haven't signed it.
• A settlement agreement must meet specific conditions to be valid. One such condition is the employee must receive advice about the terms of the agreement by an independent advisor such as a lawyer with relevant insurance or indemnity in place to cover the risk of a claim arising from the advice provided. It is only binding when the parties have signed it and any other formalities are completed, such as dating the agreement.

Facts

Ms Darlington worked for Hargrave School as an early years educator. She raised a safeguarding issue and complained to OFSTED about practices at the school which, she maintained, were protected disclosures. She left that role in May 2021. 

A few weeks later she applied for a role in another school (Westbourne) within the same local authority and was offered a job, subject to satisfactory references. Hargrave provided a reference. It was not positive and the job offer was withdrawn. 

Ms Darlington complained that the reference was misleading and inaccurate and had been written in those terms because she had made protected disclosures. Following negotiations, a settlement was reached via Acas. The parties to the agreement were Ms Darlington, the school and the local authority (referred to as the employer). 

The COT3 provided for the old reference to be retracted and new one provided. It also sought to settle:

“all and any claims which the employee has or may have in the future against the school and the employer … whether arising from the employment with the employer, its termination or from events occurring after this agreement has been entered into”. 

It expressly included claims under the Employment Rights Act 1995.  

Ms Darlington reapplied for the job at Westbourne. She was interviewed and provided the new, agreed, reference but was not successful. She believed that she had not been offered the job because she had made protected disclosures during her employment at Hargrave. 

Mrs Darlington brought a new whistleblowing detriment claim based on the same protected disclosures. An employment tribunal found that the COT3 barred this claim. 

She appealed to the EAT. She argued that the purpose of the COT3 was to compromise her claim against Hargrave School and that it did not prevent her from being able to sue other schools in the future operated by the local authority.  

Decision of the EAT

Relying on previous binding judgments, the EAT said that a COT3 can prevent an employee from bringing future claims that the parties didn't anticipate at the time it was signed, provided the wording was “clear and specific”.

In this case, as a matter of law, the local authority was Ms Darlington's employer at the time she entered into the COT3 and it was a party to that agreement. It then considered the terms of the agreement and the intention of the parties when they entered into it. 

It concluded that at the time the COT3 was negotiated, the local authority knew that Ms Darlington had applied for another role in one of its schools, and that it must have been within the reasonable contemplation of the parties that she might make further complaints based upon the same allegations she'd already raised. The purpose of the COT3 was to avoid litigation and to settle all existing and future claims arising from Mrs Darlington's allegation that she had made protected disclosures during her employment at Hargrave.  

The use of the words “whether arising from her employment with the employer, its termination or from events occurring after this agreement” was clearly intended to prevent Ms Darlington from bringing detriment claims connected to her previous protected disclosures.

The EAT concluded that if the parties only wanted to settle claims against Hargrave (via the local authority) the COT3 would have made this clear.

Comment 

On one level you can understand Ms Darlington's frustration. She believed she had not been offered the job the second time she applied for it because she had made protected disclosures to her former school, and that amounted to a detriment. 

The problem was that her former school was a maintained school and was not, therefore, a separate legal entity. The local authority responsible for it was also responsible for many other schools in the area - including the one that she believed had subjected her to a detriment.      

If Ms Darlington wanted to preserve her right to pursue claims against other schools for which the local authority was responsible, she should have carved this out of the agreement. As it was, she agreed to settle future detriment claims she wasn't aware of based on the disclosures she had already made. That meant that even if she could prove that the school had refused to employ her because she had made those disclosures, she could not bring a claim against it.  

However, the COT3 couldn't and did not stop her from making future protected disclosures against the local authority.

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