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The case of Industrious Ltd v Horizon Recruitment Ltd & Anor concerned whether the Employment Tribunal had jurisdiction to determine whether a settlement agreement (then termed as “compromise agreements”) could be deemed unenforceable due to misrepresentation. The Employment Tribunal held that it did, and the Employment Appeal Tribunal upheld the Employment Tribunal’s decision on appeal.

The facts in Industrious Ltd v Horizon Recruitment Ltd & Anor

Mrs Jane Vincent was Managing Director of Horizon Recruitment Limited from January 2006 until she resigned on 31 December 2008. She claimed that she had entered into a compromise agreement in 2008 in consideration for her resigning from her post and not pursuing any claims against Horizon Recruitment (as well as withdrawing any existing claims), and that she was to be paid the sum of £43,750 under that compromise agreement. She contended that there had been a TUPE transfer between Horizon Recruitment and Industrious Limited (“Industrious”) in early 2009 and that both Industrious and Horizon Recruitment had reneged on the compromise agreement by failing to pay her the sums that were due. In July 2009 Horizon Recruitment went into creditors’ voluntary liquidation.

Mrs Vincent subsequently brought a case in the Employment Tribunal contending that she had been misled into entering into the compromise agreement as a result of misrepresentations by one of or both Horizon Recruitment and Industrious, as one or both of them must have known when entering into the agreement that they would not be able to comply with the payment terms. She also applied to set aside the compromise agreement on that basis.

The Employment Tribunal held that Mrs Vincent’s compromise agreement was a valid agreement (as it met all of the requirements in section 203(3) Employment Rights Act 1996) and that she had an arguable case that there had been a material misrepresentation by Horizon Recruitment. The Employment Judge also found that he had jurisdiction to determine whether there was an enforceable agreement, despite Industrious arguing that only the civil courts could deal with this matter. The Employment Judge found that he did have jurisdiction to determine this point and Industrious appealed.

The Employment Appeal Tribunal, following the cases of Greenfield v Robinson (EAT/811/95) and Hennessy v Craig Myle & Co Ltd [1985] ICR 879, determined that the the Employment Tribunal did have jurisdiction to determine whether there was an enforceable agreement between Horizon Recruitment and Mrs Vincent.

Why is this case significant?

The significance of this case lies in the fact that, if some reason arises which casts doubts upon the enforceability or validity of a settlement agreement, parties can apply to the Employment Tribunal to determine whether the agreement is valid and enforceable and, if not, whether it should be set aside. Even taking into account the relatively recent increase in court fees, Employment Tribunal proceedings are generally less costly and less formal than proceedings in the civil courts, and it may therefore be an attractive forum for parties to contest issues over settlement agreements.

What does this case mean for me?

If you have entered into a settlement agreement with your (previous) employer (or your (previous) employee) and believe that there is some reason that the agreement should be voided (for example, if you were placed under undue duress, if the facts of the matter was misrepresented to you etc.) then you may wish to look at attempting to set aside the settlement agreement. The case of Industrious Ltd v Horizon Recruitment Limited & Anor is a help in these circumstances, as it means that parties can resolve such matters through the Employment Tribunal (relatively) quickly and affordably.

The original judgment can be found here: Industrious Ltd v Horizon Recruitment Ltd & Anor [2009] UKEAT 0478_09_1112

About Chris Hadrill

Chris is a specialist employment lawyer at Redmans. He specialises in contentious and non-contentious employment matters, including breach of contract claims, compromise agreements and Employment Tribunal cases. He writes on employment law matters on a variety of websites, including Direct 2 Lawyers, Lawontheweb.co.uk, LegalVoice, the Justice Gap and his own blog. Contact Chris by emailing him at chadrill@redmans.co.uk

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One Response to Industrious Ltd v Horizon Recruitment Ltd & Anor – settlement agreements, validity, and misrepresentation

  1. […] Appeal Tribunal referred to its decision in Industrious Ltd v Horizon Recruitment Ltd and anor (which is analysed by Chris Hadrill in this article) as support for its decision that the Tribunal does have the power to set aside a settlement […]

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