HPC Law: Settlement Agreements & Changes To Employment Contracts.
Agreement to change
In last month’s article, I wrote about the importance of changes in the contracts of employment and the need to obtain consent from the employee for the consent to any changes. This issue has been highlighted in the media recently by supermarket giant Asda who wanted to make changes to the contracts of employment (which included an increase in pay) to incorporate more flexible working hours, unpaid brinks and the requirement to work on bank holidays.
The reason for this change was due to customer demand.
According to the GMB Union over 90% of employees do not accept the changes. As previously highlighted, if an employee does not accept the change, then the employer may be subject to a claim for constructive unfair dismissal (provided the employee has the required 2 years’ service) on the basis that the employee feels that the change would be a fundamental breach of their contract of employment and has forced them to resign.
Interesting case concerning settlement agreements
Settlement agreements are a useful tool to terminate employment so that both the employer and employee can end the employment relationship. For the employer, there derives a lot of comfort from knowing that once the settlement agreement has been signed and the money under it paid, there is a very small chance of any recourse.
The case of Georgi Mechkarov -v- Citibank N.A is a good example of this.
The Claimant was a Bulgarian citizen who worked for the Respondent bank which had offices worldwide. He worked for the Respondent between 2003 and 2013. Initially he worked in the Bulgarian office and then worked from 2010 in the London office at Canary Wharf and became a Vice President.
In March 2013 he became unwell and was diagnosed with post-traumatic stress disorder. He took voluntary redundancy in July 2013 and in September 2013, the parties signed a settlement agreement.
From July 2014 the Claimant met with a number of employees of the Respondent seeking to return to work following his redundancy. He had a several conversations between August and December 2014 which were the subject of the appeal.
He then brought a claim against the Respondent stating that the Settlement agreement was signed under duress and was therefore invalid. He brought a claim for race discrimination and victimisation based on the conversations between August and December 2014.
The Tribunal found that the settlement agreement was valid and that his post-termination claims failed on their merits. After the matter was referred to the Employment Appeals Tribunal, they too rejected the Claimant’s appeal and said that it lacked merit and concluded that the settlement agreement was valid.
This highlights the importance of ensuring that settlement agreements are watertight and that the employee does not feel that they are being forced into signing. However, as the Claimant has to seek independent legal advice before signing the agreement, it is unlikely that many settlement agreements will be considered non-binding.