Thursday, October 21, 2010

Settling through ACAS - it's too late to change your mind!

The Scottish Employment Appeal Tribunal has handed down a ruling which reminds parties that a settlement through ACAS can be binding even though it is never formally put in writing.

Mr Bonner was bringing a claim for Unfair Dismissal.

His Solicitor spoke to his opposite number, who put forward an offer of £1000.00 on behalf of his client. After speaking to Mr Bonner, who confirmed he wanted to accept, the Solicitor rang the ACAS officer in the case. He left a message on the ACAS voicemail accepting the offer.

Both parties then expected that ACAS would assist with finalising a form of wording for a "COT3" ACAS settlement agreement formally recording the terms agreed.

Mr Bonner then changed his mind about settlement and his Solicitor sent the other side a Schedule setting out his alleged losses. In the meantime the parties asked the Tribunal to adjourn the hearing whilst discussions went on about settlement. The Respondent was adamant that there was a binding settlement, the Claimant said that there was not.

The Employment Tribunal decided that as the ACAS Officer had not spoken directly to both parties and as a COT3 would usually contain other provisions (for example for a reference to be given, or about confidentiality) there was not a binding settlement.

The Scottish EAT overturned this. It said that there had been a clear offer and a clear acceptance. The ACAS officer had "taken action" in the case. It was not a requirement of the legislation in order for the settlement to be binding that he had actually brokered the deal or physically spoken to both sides. Whilst COT3s did usually contain other provisions, there was no express agreement here to that effect and the settlement did not need any other terms in order for it to be implemented.

Mr Bonner was therefore stuck with his £1000.00.

The case is a reminder of the often forgotten fact that once a verbal agreement is reached with the assistance of ACAS it is binding and the production or signature thereafter of a COT3 (or the lack of those things) does not mean the case can be reopened. If a deal is subject to a COT3 wording being agreed then this should be specifically stated.

An interesting aside is that the Solicitor who acted for Mr Bonner in relation to the settlement not only represented him at the Employment Tribunal but also gave evidence on his behalf. The EAT expressed considerable surprise not only at the fact that he had done so but also that he did not appear to see any potential issue with this.

The case is reported at:-