Allma Construction Ltd v Bonner

A settlement of employment tribunal proceedings is concluded when a sufficiently definite offer covering the essential terms is objectively accepted. A later possibility of agreeing additional terms, or the usual use of a COT3, does not prevent an earlier binding agreement unless the offer was expressly conditional on those matters. A party’s change of mind matters only if communicated before acceptance. Later negotiations do not undo the agreement unless they amount to a variation or replacement. The tribunal’s jurisdiction is ousted under section 203(2)(e) of the Employment Rights Act 1996 where an ACAS officer has taken action under section 18 of the Employment Tribunals Act 1996; the officer need not broker or record the settlement.

The claimant brought Employment Tribunal proceedings arising from his dismissal, together with claims concerning written terms and breach of contract. Shortly before the listed hearing, the respondents’ representative offered £1,000 to settle. The claimant instructed his solicitor to accept, and the acceptance was communicated through an ACAS officer. The claimant then changed his mind before the hearing and argued that no binding settlement existed because further terms and a COT3 remained outstanding.

The Employment Tribunal held that there was no binding agreement and that the claimant could pursue his complaints. The respondents appealed, raising the proper application of contractual principles and sections 18(2) of the Employment Tribunals Act 1996 and 203(2)(e) of the Employment Rights Act 1996.

1. Appeal upheld. The Employment Tribunal’s judgment was substituted by a finding that the claim had settled and was dismissed.
2. Contractual principles applied. Objectively assessed, Mr Reilly’s offer of £1,000 was clear, sufficiently definite and intended to bind the respondents if accepted. Acceptance was communicated on 20 February 2009 when the ACAS officer left a message which Mr Reilly received. The contract was therefore concluded that day.
3. The essentials of the settlement were present. In this case, agreement that £1,000 would be paid to bring the unfair-dismissal litigation to an end was sufficient. The possibility of later agreeing payment arrangements, confidentiality, exclusions or other standard terms did not prevent the initial contract. Parties may enter further agreements, but they are not limited to a single contract. The offer was neither qualified nor conditional upon agreement of further terms.
4. The claimant’s subsequent change of mind was ineffective because it occurred after offer and acceptance. Communications on and after 23 February were irrelevant to whether the original contract had been formed. They did not vary or replace the core agreement, and the respondents continued to maintain that the case had settled for £1,000.
5. The statutory exception applied. An ACAS officer had taken action under section 18 by communicating the claimant’s acceptance and thereby endeavouring to promote settlement. The settlement did not need to be brokered or recorded by ACAS, and a COT3 was unnecessary. The ACAS officers’ views about whether a binding agreement existed were irrelevant to the legal issue.
6. The settlement was for £1,000 in full and final settlement. The sum was due and payable, and the claim was dismissed.

• Employment Appeal Tribunal: Appeal from the Employment Tribunal’s judgment registered on 14 October 2009. Appeal upheld; the judgment was substituted with a finding that the claim had settled and was dismissed.