The recent Smurfit Kappa case (2011) highlighted the importance of ensuring that an employee has access to independent legal advice when being asked to sign waiver documents or any other documents arising from the termination of their employment. Absent that independent legal advice, an employer could find him or herself exposed to a subsequent claim by an employee in respect of the termination of their employment. So how can an employer best approach such a situation and ensure protection against any possible claims going forward?
In the Smurfit Kappa case, Eoin Kerrigan had accepted the sum of approximately €25,000.00 in full and final settlement of all claims arising out of his employment with Smurfit Kappa. Mr Kerrigan had been made redundant at Smurfit and post the signing of his redundancy agreement (which contained an acknowledgement that he was accepting that sum in full and final settlement of all claims against Smurfit), lodged a claim with the EAT alleging that he had been unfairly selected for redundancy by his employers. Following selection for redundancy, he had a number of meetings with his employers prior to signing the requisite Discharge Form but ultimately signed same and accepted the sum of €25,280.76 -
“in full and final settlement of all claims arising out of my employment with [the respondent] or the termination thereof, both under statute and under common law in all respects for all purposes."
This Form also stated that the settlement sum was inclusive of but not limited to any rights the claimant had or may have under a number of Acts, including the Redundancy Payments Act, 1967 to 2003 and the Unfair Dismissals Act, 1977 to 2001. The Form further stipulated -
“I confirm that this document has been read over and explained to me prior to my signing it and that accordingly I both understand and accept the contents of this document in full."
Mr Kerrigans employers in the first instance (and of particular importance to this article) argued that Mr Kerrigan should not be allowed to bring a claim for unfair dismissal in view of the fact that he had signed the Discharge Form with the requisite waiver. Mr Kerrigan argued before the EAT that he had not been advised to seek independent advice prior to signing the Form.
The EAT in forming its decision on this preliminary point, referenced the judgement of Buckley J in Hurley –v- The Royal Yacht Club (1997 ELR 225). In that case the employer alleged that the employee had signed an agreement containing a waiver clause in respect of his rights but ultimately the EAT concluded that there must be informed consent to such a waiver. The court held in the Hurley case that there was an absence of such advice (to enable the consent to be classed as informed) and in fact went further to hold that the applicant should have been advised in writing that he should take appropriate advice as to his rights.
In the Smurfit Kappa case then the EAT noted two points from the Hurley case as follows:-
That the employee should be advised of his entitlements under employment legislation and
That the employee should be advised, in writing, that he should take appropriate advices.
The EAT also, of course, considered the more substantive aspect of Mr Kerrigan's claim for unfair dismissal and ultimately held that whilst the redundancy was lawful, the procedures used by the company in making him redundant were not fair. The EAT held that he had been unfairly dismissed and awarded Mr Kerrigan a further €10,000.00. The point for the purpose of this article of course is that notwithstanding the signing by Mr Kerrigan of the waiver, he was still entitled to subsequently bring a claim for unfair dismissal against the company.
Both of these cases highlight the importance of ensuring that when employees are asked to sign severance or waiver agreements that they are advised to get legal advice so that any waiver they sign will be deemed to have been signed in a fully informed way. It is not enough to simply set out in the severance/waiver agreement that the employee acknowledges that he has obtained legal advice. The employer must take further steps. Such steps might include (but should not be read or taken as limited to) the following:-
The employee should be advised in writing to seek independent legal advice.
The employee should be asked to confirm in writing that the employee has taken or has been given the opportunity by the employer to take independent legal advice on the relevant waiver agreement.
Employers might make a contribution to the cost of such independent legal advice upon receipt of a vouched invoice .This will be further proof that the employer has taken active, constructive steps to ensure that the employee has access to independent legal advice.
An employer could also go so far as to request that the name of the solicitor providing the advice should be set out and acknowledged and also perhaps the official stamp from the solicitors office together with the date of the advice should be set out on the relevant agreement.
In short, the more proof an employer has to show any subsequent tribunal or body that the employer has ensured that an informed consent has been obtained prior to the signing of the agreement, the more defence available to the employer.
If you have any queries please do not hesitate to contact us at Cantillons Solicitors at 021 – 4275673 or [email protected]