Court Of Appeal Ruling On Compromise Agreement

Dr David Hinton –v- University of East London
Lord Justice Mummery, Lady Justice Smith and Sir Martin Nourse
6 May 2005

The Court of Appeal overturned the decision of the Employment Appeal Tribunal in this case relating to compromise agreements. A compromise agreement is an arrangement between an employee and an employer in which the employee waives his/her right to bring certain legal actions against the employer usually in exchange for payment.

In this particular case Dr Hinton had worked as principal lecturer with the University of East London from 1995 to 2003. During his period of employment Dr Hinton had raised several grievances with his employer. However, on his voluntary retirement in July 2003 he entered into a compromise agreement with the university. This particular agreement waived Dr Hinton’s right to bring any claims against the university and included a list of specific claims, many of which were irrelevant to Dr Hinton. Dr Hinton now sought to pursue a claim against the university on the grounds that it was not specifically mentioned in this agreement while the university argued that the agreement represented full and final settlement of all claims.

Compromise agreements are governed by section 203 of the Employment Rights Act 1996, this states that ‘the agreement must relate to the particular proceedings.’ The question before the Court of Appeal, therefore, was how particular does an agreement have to be in order for it to ‘relate to the particular proceedings’?

The Court of Appeal stated that the purpose of section 203 is to protect claimants from the danger of signing away their rights without the proper understanding of what they are doing. It found that particular claims must be clearly identified in order to be covered by the agreement. A general waiver will not suffice nor will a long list of all claims known to the law. A compromise agreement must be carefully considered and tailored to the individual circumstances of a particular case. The Court also held that it would be good practice to include a brief factual and legal description of any claims which are to be waived under an agreement.