Balajova –v- Tesco Ireland Limited- the Workplace Relations Commission confirms the importance of appropriate advice when enforcing settlement agreements

Background

The Complainant was employed by Tesco Ireland Limited (the “Employer”) since 30 March 2007 as a Warehouse Manager. On 16 February 2018, the Complainant accepted a voluntary severance package of €18,000 and signed a settlement agreement in full and final settlement of all or any claims arising out of her employment (the “Settlement Agreement”). Subsequently, the Complainant discovered that several of her colleagues accepted severance packages of varying amounts and identified a male comparator who received €40,302.08. Consequently, the Complainant lodged a complaint with the Workplace Relations Commission (the “WRC”) pursuant to the Employment Equality Acts 1998-2015 (the “Acts”), arguing that the difference in severance payments constituted gender discrimination.

Preliminary Argument

The Employer argued that the WRC did not have jurisdiction to hear the case as the Complainant waived her right to lodge a claim under the Acts by signing a Waiver and Release as part of the Settlement Agreement. As the Complainant had received legal advice regarding the Settlement Agreement from her union official, the Employer submitted that this constituted appropriate advice.

However, the Complainant’s representative argued that although the Complainant had contracted out of the right to pursue claims and potential claims “that could have been taken at the time the complainant signed the severance agreement”, as the Complainant could not see into the future, the Settlement Agreement did not apply to future claims. In addition, the Complainant’s representative argued that as the Complainant was represented by her union, she did not receive “appropriate advice.”

The WRC Decision

In dismissing the complaint, the Adjudication Officer (the “AO”) held that the WRC was precluded from enquiring any further into the matter, on the basis that the Complainant had waived her right to lodge a claim under the Acts by signing the Settlement Agreement. In addition, the AO was satisfied that the Complainant provided informed consent as she had received advice from her union when she signed the Settlement Agreement and rejected the contention that “appropriate advice” can only be provided in the form of legal advice in employment law matters and the signing of a Settlement Agreement.

Key Takeaways for Employers

To ensure Settlement Agreements are fully enforceable, employers should carefully consider the following points:

  • Informed Consent: Employers must ensure that employees give full and informed consent before finalising a settlement agreement. The settlement agreement should stipulate that the employee receives legal advice in advance of the employee signing same. Where the employee refuses to obtain such advice, the settlement agreement should, at the very least, state that the employee was given the opportunity to seek legal advice and understands the legal effect and consequences of entering into the agreement.
  • Opportunity to take Advice: The employee should be provided an adequate period of time to take independent legal advice before signing or waiving their rights.
  • Financial Contribution: Prudent employers should strongly consider making a financial contribution towards the cost of the employee obtaining legal advice prior to execution of the settlement agreement.

Our Employment Team regularly advises employers on both contentious and non-contentious employment issues including employment contracts, settlement/compromise agreements, as well as Industrial Relations disputes. For more information, please contact Bláthnaid Evans or Sheila Spokes on +353 1 639 3000 or visit www.leman.ie.