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In the case of Mr M Stephenson v Next Retail Limited (2501209/2018) the Employment Tribunal held that it did not have jurisdiction to hear claims for unfair dismissal and disability discrimination as Mr Stephenson had entered into a COT3 settlement agreement in full and final settlement of any claims.

The facts in Mr M Stephenson v Next Retail Limited

Mr Stephenson commenced employment with Next Retail Limited (“Next”) on 12 March 2004 and he was dismissed on 10 March 2018 after a long period of sickness absence caused by an injury at work.

On 28 March 2018 Mr Stephenson received what he believed to be his last payslip from Next and noted that he had been underpaid by approximately 150 hours’ sick pay (amounting to £1,428.44). He subsequently commenced the ACAS Early Conciliation procedure, which is a prerequisite for bringing an Employment Tribunal claim. Mr Tovey was on 9 April 2018 appointed as the ACAS conciliator in charge of the file.

Mr Tovey contacted Ian Blackwell, the solicitor for Next, and explained that he was the ACAS conciliator appointed to the file. He explained Mr Stephenson’s position on the unpaid wages claim and Mr Blackwell indicated that Next may be willing to settle Mr Stephenson’s claims once Mr Stephenson had clarified the sum he was seeking. Mr Tovey contacted Mr Stephenson and was informed that he required the sum of £1,428.44 to settle, which was his calculation of the wages he believed that he was owed. Mr Tovey then spoke again with Mr Blackwell and it was confirmed that Next would pay Mr Stephenson the sum of £1,428.44, less tax and national insurance. Mr Blackwell confirmed that he would draft the COT3 settlement agreement and send it to Mr Tovey, so that Mr Tovey could then forward it on to Mr Stephenson. Mr Blackwell did so later the same day.

Mr Tovey called Mr Stephenson at 3.49pm on 16 April 2018 and read him the full draft of the COT3 agreement; at the end of this call Mr Stephenson said that he would accept the terms of the agreement. Mr Tovey stated that he would send the draft COT3 settlement agreement to him by email so Mr Stephenson could satisfy himself that he was happy to enter into the agreement. Mr Tovey then sent the COT3 settlement agreement to Mr Stephenson at 3.54pm – the agreement stated that it was “in full and final settlement of all and any claims arising from his employment by the respondent or the termination thereof”. At 4.04pm Mr Stephenson sent Mr Tovey an email stating “I accept the terms of the agreement”.

The next day at 9.44am Mr Tovey contacted Mr Blackwell and informed him that Mr Stephenson had accepted the terms of the COT3 settlement agreement, and that the agreement was therefore now legally binding.

After his agreement to the terms of the COT3 settlement agreement Mr Stephenson brought claims for unfair dismissal and disability discrimination against Next. Next argued that the Employment Tribunal did not have jurisdiction to hear Mr Stephenson’s claims as under the COT3 settlement agreement he had waived his right to bring any claims against Next arising from his employment or the termination of his employment.

The Employment Tribunal listed a preliminary hearing to determine whether it had jurisdiction to hear Mr Stephenson’s claims. Mr Stephenson argued that he had not fully understood that, under the terms of the COT3 settlement agreement, he would be settling any claims against Next, including his potential claims for unfair dismissal and disability discrimination; Next argued that he had freely entered into a COT3 settlement agreement which did in fact settle those claims.

The decision of the Employment Tribunal (ET)

The Employment Tribunal held that the COT3 settlement agreement that Mr Stephenson had entered into on 16 April 2018 was binding upon him, despite Mr Stephenson misunderstanding the agreement – it found that Mr Tovey had acted fairly and appropriately in his dealings with Mr Stephenson and that it was not his role to see that the COT3 settlement agreement was fair; Mr Tovey was not entitled to advise Mr Stephenson on the merits of the agreement.

The Employment Tribunal therefore held that it did not have jurisdiction to hear Mr Stephenson’s claims for unfair dismissal and disability discrimination.

Our solicitors’ views on the case of Mr M Stephenson v Next Retail Limited

Chris Hadrill, the partner in the employment department at Redmans, made the following comment on the case: “Claimants in the Employment Tribunal should carefully check the terms of any settlement agreement they are offered to make sure that they understand the agreement and that the agreement fairly reflects their understanding the terms that have been agreed with the other side – a failure to make sure that you understand the agreement can, as in this case, lead to serious potential consequences for your ability to pursue claims.”

The decision of the Employment Tribunal in Mr M Stephenson v Next Retail Limited 2501209/2018 can be found here.


Redmans Employment Team deal with employment matters for both employers and employees, including drafting employment contracts and policies, advising employers and employees on compromise agreements, handling day-to-day HR issues, advising on restructures, and handling Employment Tribunal cases for both employers and employees Call 020 3397 3603 to speak to one of the members of our employment team or email us on enquiries@redmans.co.uk. Redmans have offices in Richmond, Chiswick, Hammersmith, Fulham, Kingston, Wimbledon, Ealing, Kings Cross and Marylebone (meetings strictly by appointment only).

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