The recent Employment Appeal Tribunal (EAT) case of Industrious Ltd v (1) Horizon Recruitment Ltd (2) Vincent has shown that employment tribunals do have the jurisdiction to determine the validity of a Compromise Agreement.

Mrs Vincent was managing director of Horizon. When the firm was about to undergo a TUPE transfer to Industrious, she agreed to resign on condition that she was given a monetary payment. However, both Industrious and Horizon failed to honour the agreement.

After she initiated tribunal proceedings, Mrs Vincent was offered a Compromise Agreement that met the requirements specified in the Employment Rights Act 1996 s.203 (ERA) and promised payments to Mrs Vincent. However, no payments were forthcoming, and shortly afterwards Horizon went into voluntary liquidation.

Mrs Vincent then went to an employment tribunal to have the agreement set aside, arguing that when the agreement was made the other parties had known that there was no way thy could make the payments, so she had entered into the agreement under a misrepresentation.

The judge at the tribunal agreed with her, finding that her point was valid and that the tribunal had jurisdiction to consider the validity of the Compromise Agreement.

Industrious appealed to the EAT, claiming that, as the agreement was valid under ERA, the tribunal had no authority to go behind it, and any challenge to the agreement should be conducted through the County Court.

They lost the appeal. In summing up, HHJ Serota stated: “the word ‘agreement’ must mean a valid agreement and the Employment Tribunal has to ensure that any purported Compromise Agreement is valid.

“There is nothing in the ERA which precludes the Employment Tribunal from performing that task and the only reason of principle suggested … is that such a task might be too complex for an Employment Tribunal. Compared with the tasks facing Employment Tribunals in, for example, discrimination cases, it is not demanding or onerous to decide if an agreement can be set aside for misrepresentation.”

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