REDUNDANCY AND SETTLEMENT AGREEMENTS: INDEPENDENT LEGAL ADVICE AND INFORMED CONSENT

Redundancy and settlement agreements

Redundancy and settlement agreements were the focus of a recent Labour Court ruling in Keelings Retail Unlimited Company and Wasim Haskiya UDD2023. The case highlights the importance of seeking independent legal advice prior to signing a settlement agreement. The Labour Court overturned an earlier decision of the Workplace Relations Commission which refused to set aside a settlement agreement on the grounds that it did not have the jurisdiction to do so. Mr Wasim Haskiya (hereinafter called “the complainant”) appealed the findings of the Workplace Relations Commission to the Labour Court alleging that he had been unfairly dismissed pursuant to the Unfair Dismissals Act 1977. Keelings Retail (hereinafter called “the respondent”) argued that the Labour Court did not have jurisdiction to hear the matter and relied upon a settlement agreement which the complainant had signed in full and final settlement discharging all claims against the respondent.

Factual Background – Redundancy and Settlement Agreements 

The complainant was informed that the respondent company was undergoing a review which involved “assessing the roles” within the department and the complainant was informed that his role was at risk of redundancy. The company explored alternatives to redundancy in order to establish whether there were any alternative roles within the company which matched the complainant’s skills. The respondent concluded that there were no alternative roles which matched the complainant’s skills and he was informed that his position was to be made redundant.

The complainant was offered statutory redundancy in addition to an ex-gratia payment. The complainant was offered both payments in a settlement agreement. The settlement agreement contained no provision relating to independent legal advice, however the respondent submitted that the complainant had been “advised to take the settlement agreement away for consideration and take legal advice”. The complainant submitted in evidence that he was not advised to obtain legal advice and that he had been directed to take time off to consider his “options”. The complainant alleged that the following “options” were outlined to him by the respondent:

Option One:   Accept the redundancy offer with a good reference

Option Two: Decline the offer and the complainant’s employment would terminate regardless minus his salary, redundancy payment, ex-gratia payment or a reference

The complainant was unable to secure an appointment with a solicitor and signed the settlement having considered the “options” put to him without the benefit of independent legal advice. The respondent company did not follow up with the complainant to establish whether he had obtained legal advice prior to signing the settlement agreement. The Workplace Relations Commission held that it did not have jurisdiction to “go behind the waiver agreement entered into by the parties” and as such declared that complainant’s claim under the Unfair Dismissals Act was not well founded.

Labour Court Appeal

The complainant appealed the adjudicator’s findings to the Labour Court. The complainant outlined that he “felt under pressure to sign the terms” of the settlement agreement. The complainant further outlined that he is a “Palestinian person whose first language is not English” and as such had great difficulty understanding Irish employment law “particularly so in the absence of legal advice”. The complainant submitted that having regard to the circumstances that the settlement agreement was null and void. The complainant referred to and relied upon Section 13 of the Unfair Dismissals Act 1977 which states as follows:

“13.- A provision in an agreement (whether a contract of employment or not and whether made before or after the commencement of the Act) shall be void in so far as it purports to exclude or limit the application of , or is consistent with, any provision of this Act.”

The Labour Court considered Section 13 of the Unfair Dismissals Act 1977 when applied to a range of disputes such as the one which was before the Labour Court. Specifically, the Labour Court referred to Sunday Newspapers –v- Kinsella and Bradley FTD6/2002 [2006] ELR 227 where the Court was tasked with distinguishing between an agreement which is lawful and enforceable as distinct from an agreement which is void and of no effect.  The following factors were outlined as indicative of distinguishing the former from the latter:

  • “The terms of any waiver must be construed against the party from whom it emanated. Where there is doubt the course of negotiations between the parties should be examined so as to ascertain what was intended.
  • An agreement to waive statutory rights must be supported by consideration
  • The waiver should list the various Acts being taken into account.
  • The waiver is only valid if it is based on a free and informed consent given by a person with full knowledge of their legal rights
  • It is for the employer to ensure that the worker is capable of giving informed consent and the employer should normally advise the worker in writing to obtain professional advice before inviting him or her to sign a waiver.”

The Labour Court held that the complainant had signed the settlement agreement in circumstances where it was clear that no meaningful “negotiations” had taken place. The Labour Court was critical of the fact that the respondent “made no effort” to establish whether the complainant had been legally advised prior to signing the settlement agreement. The Labour Court concluded that “no basis exists to conclude that the Appellant’s consent to waive his rights was based on free and informed consent given by him with full knowledge of his rights”. The Labour Court set aside the settlement agreement and concluded that the complainant had been unfairly dismissed awarding compensation.

Anyone wishing to read the above decision from the Workplace Relations Commission may do so by accessing www.workplacerelations.ie. Should you wish to discuss any of the above matters, or if you require advice in relation to  redundancy and settlement agreements please get in touch by contacting us at (01) 833 8147 or alternatively you can email at info@collierlaw.ie.