Landmark Cases - Settlement Agreements - Caruana v Fruit of the Loom

Peninsula Team

July 04 2012

Further to our recent post on Settlement Agreements, we have decided to look at the case of Caruana -v- Fruit of the Loom International Ltd. (2011 IEHC 130) as this weeks Landmark Case. This case was cited in our previous post, and is of particular importance to Settlement agreements moving forward. the crux of the issue as far as Settlement Agreements are concerned is in relation to the exhaustive listing of legislation by which an employee is barred from taking a claim.

Background The Employee took a claim for damages against the Employer for personal injury, loss and damage alleged to have been suffered by him as a result of negligence, breach of contract, and, breach of duty including statutory duty on the part of the Employer. Summary The Employees "Personal Injury" was later identified as stress at work occasioned by the failure of the Employer to maintain a relationship of trust and confidence with the Employee and, in causing or permitting him to be, verbally abused, subjected to unfair questioning, undermined at work, discriminated against in staff rostering, shift work and overtime, accused of incompetence in the course of his work and, deprived of his recognition as shop steward. The Employer however argued that the Employee was "estopped and precluded" by the terms of a “Discharge Form” dated the 30th April, 2004, from initiating and prosecuting these proceedings. This Discharge Form is essentially a Compromise/Settlement Agreement. By the terms of the agreement the several sums of money agreed to be paid to the Employee by the Employer were agreed and stated to be:- “In full and final settlement of all claims of every nature, type and kind whatsoever and howsoever arising in respect of and from both my former employment and the termination thereof by reason of redundancy . . . including my abovementioned two employment claims, both under statute and at common law, in all respects and for all purposes, with the exception of my two outstanding employer liability claims for personal injuries against [the defendant].” The Employee claims that the present action is one of these two excepted claims, however the Employer, on the contrary, argued that it is not and stated that during the course of the negotiations leading up to the agreement, in the drafting of the agreement, at the time of its execution and for six months thereafter they were entirely unaware of this claim.  The Employee was effectively arguing that as the employer did not exhaustively list the legislation he was restricted from taking a claim under, his claim should be allowed. the Court however did not agree as he had received independent Legal Advice on the matter and was himself well versed in Employment Law and his rights as he: "...had successfully challenged three disciplinary decisions against him by the defendant before a Rights Commissioner…Though a general operative with the defendant the plaintiff was a S.I.P.T.U. shop steward and the history of his employment and dealings with the defendant demonstrates that he was possessed of an alert and resourceful mind." The court also added "The agreement is specific: it does not employ the words “any” or “all” or “whatever” or “such” or other general expressions. It is utterly improbable that the agreement was intended to mean two outstanding employer liability claims for personal injuries whatever they might be." Impact in contrast to existing legislation (Hurley -v- Royal Yacht Club, which stated that for an agreement to be enforceable it should list all the various acts applicable) the Caruana case highlighted that where a person is aware fo their rights and the fundamental elements of a Settlement Agreement, they would be at pains to argue that as the legislation is not listed they should not be debarred from taking a claim. Ideally an employer will still list these pieces of legislation in the Agreement in order to ensure the integrity of the Agreement, however where they are omitted, if the employee has obtained legal advice and can be considered to be aware of the legal position (HR Professionals, or Legal Professionals) it would arguable that in light of the Caruana -v- Fruit of the Loom International Case the claims should not be heard.

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