D-BRIEF – Employment & Pensions Blog: Personal Injury Claim able to proceed despite the parties previously entering into a Settlement Agreement

The High Court has ruled that the personal injury case of Farnham-Oliver v RM Educational Resources Ltd was able to proceed, despite the parties having entered into a Settlement Agreement to settle the same matter arising in an Employment Tribunal claim brought five years previously.

Marcus Farnham-Oliver (“MFO”) was employed by RM Educational Resources Limited (“RM Educational”) as a customer adviser. MFO suffered various physical and mobility problems. During his employment, MFO had lodged a grievance and claimed that he was suffering from work-related stress due to his working environment and that he had been unlawfully harassed and discriminated against by another employee.

In January 2014, MFO lodged a claim with the Employment Tribunal in relation to these issues and this claim was settled in February 2015. The COT3 settlement between the parties included agreement that MFO’s employment would terminate, a settlement payment would be made, tribunal proceedings would be withdrawn and most critically the following:

“the Claimant is not prevented from pursuing his potential claim for damages arising from a personal injury allegedly suffered as a result of work related stress.”

High Court Case
Five years later, MFO lodged this personal injury claim. RM Educational applied to strike out the claim on the basis that it was an abuse of process given it related to the same issues and period as the Employment Tribunal claim. They submitted that there was no special reason why the subject matter of the personal injury claim couldn’t have been dealt with as part of the tribunal claim and that MFO was guilty of undue harassment of RM Educational.

The High Court rejected the application to strike out the personal injury claim on the basis that there was nothing in the COT3 stating a claim could not be brought in respect of the same period of employment and indeed the settlement terms positively permitted the personal injury claim to be brought. As such, at the time it entered into the agreement, the employer accepted that the personal injury claim was not part of the employment tribunal claim and was prepared to take a risk in respect of whether a civil claim was ever brought.

This case highlights the importance of the settlement terms being drafted correctly and employers’ understanding the risks of allowing personal injury claims to be expressly reserved. In reality, existing personal injury claims are often excluded from settlement agreements as employers’ are unlikely to want to pay to settle personal injury claims which should be covered by their employers liability insurance. Notwithstanding this, global settlement figures can be agreed to include existing personal injury claims and if this is the case, the drafting is key to ensure no later claims can be brought on the same facts.

It is important to note that only existing personal injury claims that can be settled under a settlement agreement. Employers will therefore routinely see a carve out of settlement terms for personal injury claims which an employee is not yet aware of and could not reasonably be expected to be aware of at the date the agreement is entered into.

For more information, please contact a member of the Employment Team.

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