An employment tribunal is allowed to consider whether a COT3 settlement agreement should be set aside for misrepresentation. In doing so, it is entitled to look at without prejudice material because an exception applies to the without prejudice rule in those circumstances, according to the EAT.
Cole v Elders Voice (UKEAT/0251/19/VP)
What are the practical implications of this judgment?
This judgment is authority in an employment law context that there is an exception to the without prejudice rule to the effect that material that is otherwise without prejudice can be used to show that a settlement agreement should be set aside on the grounds of misrepresentation.
This judgment also lends weight to the argument that the decision in Industrious is correct (i.e., that an employment tribunal has jurisdiction to consider whether a settlement agreement should be set aside for misrepresentation) and that the judgment to the contrary in Patel was wrongly decided.
What is the relevant background?
Background law
An agreement reached under the auspices of a conciliation officer is one of the two exceptions to the ‘contracting out provisions’ which apply to most employment protection legislation, which impose a basic rule that any provision in an agreement that purports to prevent a person from making, or proceeding with, a claim to an employment tribunal is void to that extent.
A conciliated agreement may validly be reached orally. However, it is advisable for its terms to be recorded in writing and, ideally, endorsed by the conciliating officer. The use of a Form COT3 (a standard form available from Acas) to record a conciliated agreement will be sufficient to constitute the necessary ‘action’ by a conciliation officer.
Once a contracting-out agreement has been concluded through the intervention of a conciliation officer, it is very difficult for a party to get it set aside.
An employment tribunal has jurisdiction to hear such a claim and a separate application to a court need not be made. That was held to be the case by the EAT in Dahhan, decided in 2016, which relied on the 2010 judgment of the EAT in Industrious (which itself considered Eden, Hennessy, and Milne).
However, according to the EAT in Patel, the setting aside of a conciliated agreement on common law or equitable grounds is not something that can be done by the EAT in the exercise of its statutory jurisdiction to determine appeals on issues of law and a separate action in the High Court or a County Court is required.
It follows that there is some conflict in the existing authorities in this area, with Patel being the EAT’s most recent expressed view on the subject (in which it endorsed the approach in the earlier case of Freeman) and it may take a judgment on the point from the Court of Appeal or above to achieve complete clarity as to whether the ET and the EAT have jurisdiction themselves to entertain such applications.
The without prejudice rule is a rule of evidence which (subject to exceptions) makes inadmissible in any subsequent litigation evidence of communications made in negotiations entered into between parties with a view to settling litigation or a dispute of a legal nature. The rule applies to exclude all negotiations genuinely aimed at settlement, whether oral or in writing, from being given in evidence.
There are limits to the application of the without prejudice rule. In particular, it cannot be relied on in negotiations ‘if the exclusion of the evidence would act as a cloak for perjury, blackmail or other ‘unambiguous impropriety‘. Other exceptions to the without prejudice rule include where material that is otherwise without prejudice is used to show that an agreement should be set aside on the grounds of misrepresentation, fraud, or undue influence.
Case details
- Court: Employment Appeal Tribunal
- Judge: Mr Justice Griffiths
- Date of judgment: 26 November 2020
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